Japan's Softbank Hungers for T-Mobile, FCC Says "Not so Fast"
February 4, 2014 7:00 PM
comment(s) - last by
Regulators are skeptical that eliminating the uncarrier, rolling it into Sprint would be "good for consumers"
Japan's Softbank Corp. (
) is used to winning, and doesn’t take no for an answer very often. Last year it climbed from third place up to second in Japan's mobile subscriber rankings and it also entered the U.S. market,
taking a majority stake (78 percent) in Sprint
) with a cash-heavy $21.6B USD offer.
I. The Death of an (Un)Carrier?
But the new Sprint is
looking a lot like the old Sprint
over Softbank's first couple quarters in charge, bleeding money and customers. In the face of this growing headache, Softbank isn't backing down. It's instead opting for
an unusual and some would say troubling
solution to Sprint's problems.
It's in serious pursuit of
America's fastest growing carrier
, Deutsche Telekom AG's (
) T-Mobile USA. Deutsche Telekom has been eager to dump T-Mobile for some time. Despite its recent success -- the payoff of
2013's merger with MetroPCS
-- T-Mobile USA's German owner reportedly remains fairly interested in a sale.
One crucial question is whether such a deal would possibly fly.
Just a couple years ago
U.S. Federal Communications Commissions
U.S. Department of Justice
won a hard-fought war
against AT&T, Inc. (
), who had
sought to gobble up T-Mobile
This week, Softbank's Chairman and CEO Masayoshi Son was in Washington, D.C., trying to convince federal regulators at the FCC that a Sprint-T-Mobile union would be good news for consumers. Mr. Masayoshi brought
Sprint's embattled CEO Dan Hesse
Softbank CEO Masayoshi Son (left) and Sprint CEO Dan Hesse [Image Source: Kyoto Newscom]
, the crux of the Japanese executive's argument is that Sprint and T-Mobile are too small to compete separately. T-Mobile has 45 million customers, while Sprint is currently at around 54 million subscribers. Both are still a long ways away from AT&T's 76.2 million subscribers and Verizon Inc. (
) subsidiary Verizon Wireless's 96.2 million customers.
But there are a couple weaknesses in the argument. First, Sprint is midway between AT&T and T-Mobile in subscribers, raising the question of why it should be allowed to buy T-Mobile if the AT&T purchase is verboten.
Softbank wants to put an end to the "uncarrier" and roll T-Mobile into its Sprint brand, according to reports. [Image Source: Flickr (top); Getty Images (bottom)]
Second, it would be an odd couple to say the least. Compared to deals like the Softbank-Sprint tie-up -- which leveraged international business synergies -- or T-Mobile USA and MetroPCS -- which combined largely non-overlapping businesses -- Sprint and T-Mobile USA are direct competitors. And the idea that handcuffing the market's brightest rising star (T-Mobile) to the biggest loser in the U.S. mobile market currently (Sprint) is also rubbing many the wrong way.
II. FCC Stands Opposed
new FCC Chairman Thomas ("Tom") Wheeler
-- an official who hails from a background as a former wireless industry lobbyist -- the talks mark a key test.
Despite his background, Mr. Wheeler has called himself an "unabashed" supporter of competition, and hinted that he will follow in his predecessor
's footsteps, looking to wield his authority to block further concentration in the mobile market. The potential bid to consolidate America's third and fourth largest carriers is perhaps the new Commissioner's biggest chance yet to leave his own regulatory mark on the industry.
FCC Chairman Tom Wheeler is reportedly "highly skeptical" of a Sprint-T-Mobile merger.
[Image Source: Reuters]
that an unnamed FCC official, who was not at the meeting, but was familiar with Mr. Wheeler's discussion with Mr. Masayoshi and Mr. Hesse, said that the FCC Chairman was "highly skeptical" of the deal.
also cites an anonymous high-level source close to Softbank as saying:
I'm not unduly surprised by the FCC chairman's skepticism. I feel it's a rather typical reaction.
If Sprint's majority owner did score a majority bid in T-Mobile USA, a key question would be what its strategy would be. While it might make sense to merge the brands under the faster-growing, more positively perceived T-Mobile USA banner, sources indicate that Softbank might instead look to tuck T-Mobile into Sprint, rebranding its stores and devices.
Sprint and Softbank are reportedly eager to bury the "uncarrier" campaign, which is costing them (T-Mobiel US CEO John Legere). [SOURCE: The New York Times]
Likewise, with T-Mobile
forcing Sprint and AT&T to get more competitive with pricing
, it is rumored that Softbank is keen on ditching
T-Mobile's "uncarrier" strategy
and aggressive rates, before it creates further woes for the Sprint brand.
T-Mobile might also have to sell off its MetroPCS unit if it were to be acquired.
All in all, any of these moves on their own could crippled T-Mobile USA, who is showing impressive growth, but remains a fragile recovery story.
If Mr. Wheeler's stony silence was viewed as bad sign for Sprint and Softbank, then
comments this week
William Joseph "Bill" Baer
, the head of the DOJ's antitrust division, are an even harsher warning. In a speech he praised T-Mobile's role in driving competition, not so subtly adding:
Merger litigation is costly and time consuming. But the last few years demonstrate that we will not hesitate to challenge in court anticompetitive transactions where that is the right course.
It's increasing looking like even if Mr. Masayoshi does view T-Mobile as Sprint's ticket to fiscal rejuvenation, that Mr. Wheeler and Mr. Baer, along with the rest of the DOJ and FCC are unlikely to meekly bow to the plan.
As Lee Corso says, "Not so fast, friend!"
This article is over a month old, voting and posting comments is disabled
RE: If you're having phone problems I feel bad for you son.
2/5/2014 1:34:20 PM
No they wont. I walked in there a few weeks ago and they told me that was only for Family Plans, and ONLY if the person who's name it's under switches every line to T-Mobile.
Now if that's wrong, or if they changed the policy, let me know.
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
T-Mobile Will Pay Up to $350 in ETFs Per Line for New Customers, Celebrates Over 1.6 Million Additions in Q4
January 8, 2014, 4:09 PM
Report: Fusion Fail? Softbank Wants to Merge Sprint and T-Mobile
December 15, 2013, 6:12 PM
Sprint Loses 313,000 Total Subscribers, Posts a Net Profit and Operating Loss
October 30, 2013, 12:17 PM
Sprint Closes Clearwire Acquisition, Softbank Completes Sprint Acquisition
July 12, 2013, 11:31 AM
FCC Chair Nominee Wants to Fully Legalize Phone Unlocking
June 20, 2013, 4:14 PM
Paypal Takes Potshot at Apple Pay, Mentioning iCloud Breach in New Ad
September 16, 2014, 7:24 AM
Quick Note: New "Windows" Branding for Microsoft's Smartphones is Leaked
September 15, 2014, 2:00 PM
Sony Abandons Android Upgrade Support for Year Old Xperia and 3 Others
September 15, 2014, 11:07 AM
Apple Racked Up 4 Million iPhone 6, iPhone 6 Plus Pre-orders Within 24 Hours
September 15, 2014, 9:54 AM
Despite Massive Failure of Apple Store Website, "Record Number" of iPhone 6 Pre-orders Received
September 12, 2014, 1:19 PM
Quick Note: Motorola Set to Release Unlocked, “Pure Edition” of Second Gen Moto X
September 12, 2014, 12:37 PM
Most Popular Articles
Dell Announces "World's Thinnest" Tablet: The Venue 8 7000 Series
September 11, 2014, 8:51 AM
Apple Announces Its Smartwatch: The $349 Apple Watch
September 9, 2014, 2:09 PM
Quick Note: Buy an Xbox One Sept 7-13, Get a Free Game
September 4, 2014, 10:42 AM
Quick Note: Microsoft to Ditch Windows Phone, Nokia Branding
September 10, 2014, 2:14 PM
Apple Announces 4.7" iPhone 6, 5.5" iPhone 6 Plus
September 9, 2014, 1:45 PM
Latest Blog Posts
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information