http://www.businessinsider.com/t-mobile-usa-might-sell-to-sprint-2011-3
Last year and the year before that I voiced opposition to a merger between T-Mobile and Sprint. Sprint is a CDMA carrier and T-Mobile is a GSM carrier. In short, I was fearful that we would be seeing another Nextel situation. However, as in every turnaround situation, timing is everything.
I have always been a supporter for a merger between Comcast and Sprint. For the last couple of years I have believed that Sprint’s WiMAX plans and Comcast’s wireless needs provided a perfect opportunity to form a relationship between the two. However, in order for Sprint to continue its recovery it had to consider a dual path 4G strategy; i.e., LTE and WiMAX. I have no inside knowledge of what is going on in Dan Hesse’s mind but based on the carrier’s public actions it appears apparently so.
Sprint needs scale in order for it to claim its turnaround is complete. A T-Mobile merger would accomplish that plus enable Sprint to do even more.
Now that Sprint appears to be going down an LTE path, a merger with T-Mobile makes perfect sense. Even more importantly, it can be executed. LTE and WiMAX use the same base orthogonal waveform. LTE and WiMAX are OFDMA waveforms. The messaging may be different but not so different that you cannot interoperate the systems. Hence, both Sprint and T-Mobile can merge at a technical level. As for the business aspects of the merger, that is a whole other matter.
Of course, the big downside is that T-Mobile isn’t moving down the path of LTE anytime soon; which means Sprint cannot take advantag eof any LTE investments made by T-Mobile. Now that is a bit of a monkey wrench. However, I do not believe it is a show-stopper. If you believe that Sprint is running a dual path 4G strategy, then the T-Mobile network can be viewed as a network that can be evolved later. T-Mobile has no other place to go as network evolution goes; it is either LTE or WiMAX. Worse case, T-Mobile sits at HSPA+; no big deal and not even a permanent condition. At a minimum, having aligned network strategies is a big step.
For those who try to compare a T-Mobile merger with the Sprint-Nextel merger, you would be off-base. Nextel’s iDEN network could not be evolved to interoperate with Sprint’s CDMA network; the two were and still are totally and completely incompatible radio technologies.
What Dan Hesse needs to start doing is thinking about Sprint in broader terms; in other words, Sprint is a content manager and network access company. By thinking broader, Dan Hesse will be able to execute a broader strategy, which will lead to a stronger recovery and turnaround for the company. I still believe that a merger or joint venture with Comcast will enable Sprint and Comcast to synergize their content strategies. I think T-Mobile can be integrated into Sprint’s operation and definitely far more easily than Nextel had been integrated.
As for Sprint’s relationship with Clearwire that will work itself out.
The fastest way for Sprint to maximize all of these relationships is to execute in phases and to consider network sharing. I have been a past proponent for network sharing for years. Network sharing is the fastest way to make enormous amounts of broadband capacity without having to go through the pain and agony of doing a major network buildout. Network sharing is a temporary resource saver.
Dan Hesse has to move quickly to bring all of these moving parts together. I have heard plenty of comments about my position. Bottom line; in the short term a merger will be painful but in the long term the gains will be enormous.