Sprint execs warn AT&T, T-Mobile deal could hurt profits
Speaking at an industry conference on Tuesday, executives from the wireless network Sprint Nextel cautioned that AT&T's $39 billion purchase of T-Mobile USA would likely hurt the company's profitability.
Though Sprint has not yet officially opposed the merger, company officials commented on the acquisition Tuesday at the International CTIA wireless conference in Orlando, Fla., Reuters reports.
"When one competitor has that much buying power they can determine the fate of different products," Farib Adib, a Sprint executive in charge of handsets.
As the third-largest wireless carrier in the U.S., Sprint faces stiff competition from first and second place Verizon and AT&T, and last month's launch of the iPhone 4 on Verizon will likely continue to extend the gap.
Steve Elfman, Sprint's president for network operations, warned that a combined AT&T and T-Mobile, which would total about 130 million users, would place significant competitive pressure on Sprint. "They could get better pricing from suppliers than we could and we could be at a disadvantage," he said.
If that were to happen, Sprint's profits could dip and consumers would lose out too if rising costs were passed on to subscribers. "If we have to go down in pricing it will affect our profitability. It could also drive pricing up," said Elfman.
Speaking at the conference, Sprint Chief Executive Dan Hesse cautioned that phone subsidies from carriers will continue to increase as "devices get more powerful." As manufacturers race to outdo each other on camera quality and data transfer speed, "there's going to be more cost to us," said Hesse.
Hesse also criticized the deal in an interview with CNBC's Jim Cramer on Tuesday, as reported by TechCrunch. "If this transaction goes through you?re talking 79 percent, or roughly 80 percent of the market controlled by two companies. I think that?s a little too much?too much concentration," he said.
AT&T and T-Mobile issued a joint press release on Sunday announcing the $39 billion cash and stock deal, which would give Deutsche Telekom an 8 percent stake in AT&T. Though it seems inevitable that T-Mobile would begin carrying Apple's iPhone as a result of the deal, since AT&T was Apple's original partner for the smartphone, the company has cautioned customers that the proposed acquisition will take approximately 12 months to complete.
Shortly after the deal was announced, Minnesota Senator Amy Klobuchar called for an examination of the deal by the Federal Communications Commission and the Department of Justice, citing concerns that a lack of competition could potentially lead to higher prices and reduced service.
AT&T plans to provide service to both carriers' subscribers with shared infrastructure at first, before transitioning T-Mobile customers to its 3G/HSPA+ network. In the longer term, the carrier is relying on a '4G' LTE network, with added help from T-Mobile's AWS spectrum.
Rumors had suggested that Sprint was very interested in buying T-Mobile in an effort to catch up to the larger Verizon and AT&T networks. Earlier this month, Bloomberg reported that Deutsche Telekom and Sprint Nextel were in talks to merge Sprint and T-Mobile USA. At the time, analysts estimated that T-Mobile was worth $15 billion to $20 billion, a figure significantly less than the deal that AT&T struck.
Though Sprint has not yet officially opposed the merger, company officials commented on the acquisition Tuesday at the International CTIA wireless conference in Orlando, Fla., Reuters reports.
"When one competitor has that much buying power they can determine the fate of different products," Farib Adib, a Sprint executive in charge of handsets.
As the third-largest wireless carrier in the U.S., Sprint faces stiff competition from first and second place Verizon and AT&T, and last month's launch of the iPhone 4 on Verizon will likely continue to extend the gap.
Steve Elfman, Sprint's president for network operations, warned that a combined AT&T and T-Mobile, which would total about 130 million users, would place significant competitive pressure on Sprint. "They could get better pricing from suppliers than we could and we could be at a disadvantage," he said.
If that were to happen, Sprint's profits could dip and consumers would lose out too if rising costs were passed on to subscribers. "If we have to go down in pricing it will affect our profitability. It could also drive pricing up," said Elfman.
Speaking at the conference, Sprint Chief Executive Dan Hesse cautioned that phone subsidies from carriers will continue to increase as "devices get more powerful." As manufacturers race to outdo each other on camera quality and data transfer speed, "there's going to be more cost to us," said Hesse.
Hesse also criticized the deal in an interview with CNBC's Jim Cramer on Tuesday, as reported by TechCrunch. "If this transaction goes through you?re talking 79 percent, or roughly 80 percent of the market controlled by two companies. I think that?s a little too much?too much concentration," he said.
AT&T and T-Mobile issued a joint press release on Sunday announcing the $39 billion cash and stock deal, which would give Deutsche Telekom an 8 percent stake in AT&T. Though it seems inevitable that T-Mobile would begin carrying Apple's iPhone as a result of the deal, since AT&T was Apple's original partner for the smartphone, the company has cautioned customers that the proposed acquisition will take approximately 12 months to complete.
Shortly after the deal was announced, Minnesota Senator Amy Klobuchar called for an examination of the deal by the Federal Communications Commission and the Department of Justice, citing concerns that a lack of competition could potentially lead to higher prices and reduced service.
AT&T plans to provide service to both carriers' subscribers with shared infrastructure at first, before transitioning T-Mobile customers to its 3G/HSPA+ network. In the longer term, the carrier is relying on a '4G' LTE network, with added help from T-Mobile's AWS spectrum.
Rumors had suggested that Sprint was very interested in buying T-Mobile in an effort to catch up to the larger Verizon and AT&T networks. Earlier this month, Bloomberg reported that Deutsche Telekom and Sprint Nextel were in talks to merge Sprint and T-Mobile USA. At the time, analysts estimated that T-Mobile was worth $15 billion to $20 billion, a figure significantly less than the deal that AT&T struck.
Comments
But then again, maybe there is a "different reason" for the warning.
CGC
So which is it? I guess it depends on your own personal bias as always.
before the iphone they decided to become a low cost carrier. i would see an hour long line of illegals waiting to pay at the cash machine they had in stores and no good phones. and instead of going with standards they tried to deploy wiMax
sprint did it to themselves
before the iphone they decided to become a low cost carrier. i would see an hour long line of illegals waiting to pay at the cash machine they had in stores and no good phones. and instead of going with standards they tried to deploy wiMax
And they aren't even deploying WiMAX themselves.... they're using Clear's network.
Sprint is not gonna last.
Not consumers, not choice, not monopolization.
Profits.
There's another company from which I'll never buy.
Sprint's profits??
And they aren't even deploying WiMAX themselves.... they're using Clear's network.
Sprint is not gonna last.
sprint is a major investor in clear
Profits.
Not consumers, not choice, not monopolization.
Profits.
There's another company from which I'll never buy.
Oh, they've already claimed that as well, pretending they're on the side of the consumer activists. Of course Sprint's real motivation for everything they have said and will say about the purchase is the negative effect it will have on their bottom line. Which is to be expected. To think otherwise is incredibly naive.
"If we have to go down in pricing it will affect our profitability."
Well, duh
.
.
Profits.
Not consumers, not choice, not monopolization.
Profits.
There's another company from which I'll never buy.
You'll never buy from a company where profit is their primary objective? What do you buy then?
Whatever it is, you better stock up, it won't be around long.
Profits.
Not consumers, not choice, not monopolization.
Profits.
There's another company from which I'll never buy.
You better stop buying Apple products, then. Just because they build something that i beneficial to you doesn't mean they do it to make people feel good. If there was no money in the iPhone, iPod, iPad, or anything else they create, they wouldn't continue making it. And that's the same with any for-profit organization. It's called capitalism - you capitalize on as much capital as you can.
I don't know... I see a lot of T-Mobile customers who don't like AT&T switching to Sprint.
You see a lot of them doing that, do you? So going from the least wanted network to the second least wanted network is a step up, I suppose.
You see a lot of them doing that, do you? So going from the least wanted network to the second least wanted network is a step up, I suppose.
T-Mobile's network isn't far reaching, but that doesn't mean they suck. Sprint just plain sucks.
T-Mobile has always been inexpensive. Also, they brought Android to market when no one else would, they let you use wifi for calls instead of minutes. Very progressive. It's too bad that AT&T will get them and ruin it.
Back to the stone age for wireless...the iPhone shook everyone up, but now that the hardware is old hat, the networks can turn off the lights on progress by buying out the underdog. This particular carrier had so much promise though; too bad they didn't get their network built out wide enough.
T-Mobile's network isn't far reaching, but that doesn't mean they suck. Sprint just plain sucks.
T-Mobile has always been inexpensive. Also, they brought Android to market when no one else would, they let you use wifi for calls instead of minutes. Very progressive. It's too bad that AT&T will get them and ruin it.
Back to the stone age for wireless...the iPhone shook everyone up, but now that the hardware is old hat, the networks can turn off the lights on progress by buying out the underdog. This particular carrier had so much promise though; too bad they didn't get their network built out wide enough.
T-Mobile also has more expensive plans for customers. The current round of cheap plans started right AFTER Sprint offered the all you can eat plan for $70 a month. Both companies are having the major problem of seeing those higher end customers defecting to AT&T and Verizon, leaving them with the barely profitable low paying remains.
Sprint has gotten much better since I left them for the iPhone 3G. Better network than T-Mobile, and available in many more places.