Sprint & T-Mobile drop the merger, Sprint switches to “win win” deal with Altice
- Sprint and T-Mobile wind up merger talks
- Sprint opts for MVNO and fibre deal with Altice
Sprint and T-Mobile recently declared that, despite a lot of trying, the companies have been unable to find mutually agreeable terms for a merger, so the talks are dead.
In a statement John Legere, President and CEO of T-Mobile US, never missing a chance for a sly dig, said that “the prospect of combining with Sprint has been compelling for a variety of reasons, including the potential to create significant benefits for consumers and value for shareholders. However, we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared to our outstanding stand-alone performance and track record.” In other words, T-Mobile was better off battling on as a standalone - aggregate performance would be dragged down by Sprint.
Almost immediately after the ending of the Sprint/T-Mobile merger talks, Sprint announced a multi-year strategic agreement with Altice USA under which it would use Altice’s broadband platform to accelerate the densification of its network and Sprint’s mobile network would provide mobile voice and data services to Altice customers in an MVNO agreement.
This arrangement must have been have been on the table through at least the latter half of Sprint’s negotiation with T-Mobile (these things don’t just pop up overnight) and while it might grab the spotlight for a day or two to soften the stark failure of the merger talks, it won’t really compensate for the dead deal which would have been transformative for the US market.
A new sort of MVNO
Although obviously not the first MVNO, Sprint and Altice claim this is the first ‘agreement of its kind’ because the skin in the game has been donated by both parties to create a balanced network swap.
The traditional MVNO (a tortuous acronym if ever there was one) is better understood as a Wholesale/Retail arrangement where the retailer (the MVNO) undertakes to build and manage its own back end involving billing, marketing, customer help and the rest of it, essentially buying network capacity from the ‘real’ mobile network operator and selling it under its own brand.
The major problem with being a traditional MVNO is that the power relationship is not necessarily favourable - the MNO holds the cards and might decide that the mobile user segment it was happy to let the MVNO target five years ago, is one it would like back.
The Sprint/Altice deal, however, has a stabilizing symmetry to it. Both parties hold important cards for the other. Sprint has the mobile capacity while Altice has some of the fibre Sprint will find necessary to densify its network for small cells. Altice says it will ”leverage its network to support Sprint’s network densification efforts and establish a differentiated network operating model going forward”.
In the longer run, the companies expect the entire industry to be headed in the mobile/fibre hybrid direction implied by their tie-up.
“We are incredibly excited to work with Altice US on this innovative win-win solution that benefits both of our companies,” said Sprint President & CEO Marcelo Claure. “As content and connectivity continue to converge, we believe this approach will be a model for future strategic arrangements across multiple industries including cable, tech and others.”
Claure continued, “Sprint has more spectrum and capacity than any other carrier in the U.S. This is a tremendous advantage, allowing Altice USA customers to experience our best-ever network... This agreement also gives us a unique opportunity to accelerate the work we are doing to massively densify our network across Altice’s U.S. footprint.”
Sign up to receive TelecomTV's top news and videos, plus exclusive subscriber-only content direct to your inbox.