- Industry ‘chatter’ is intensifying as a Sprint and T-Mobile merger attempt seems increasingly likely.
- Given each company’s relatively weak position in enterprise services, a combination will not result in a superior enterprise mobility portfolio, at least at first.
Sprint and T-Mobile merger rumors have been circulating for many years, as the number two and three mobile operators are in many ways a likely pairing to go after Verizon and AT&T, possibly expanding business focus, lowering prices and improving customer responsiveness.
Each of the two service providers has its own strengths and weaknesses in the business sector. Sprint has had weak sales in the enterprise sector over the past five years, especially in its wireline business, but has a loyal installed base. In recent years, it has focused on smaller businesses, leaving the large enterprise and MNC sectors to others. It recently claimed to be re-energizing its solution set across all business segments, providing a product roadmap to the analyst community (see Sprint Business Event Discloses Strategy, Roadmap, and a Few Surprises, June 13, 2017).
Sprint has not been strong in the global market in spite of its ownership by Japanese operator SoftBank as well as having a global MPLS network. In the mobile world, its CDMA heritage had been a barrier for many years to businesses looking to Sprint for global wireless services. Add on to that several years where its mobile network was not performing well, and its traction in enterprise mobility services has been outstripped by AT&T and Verizon.
T-Mobile USA has become a disruptive carrier that offers especially aggressively priced wireless-only services and bundles as well as free global roaming, no contracts, no overages and other incentives that have excited the consumer market and have also been taken up by small businesses. Its parent, Deutsche Telekom, has appreciated the growth of its U.S. progeny, and has not imposed on it a large enterprise/MNC organizational overlay, instead giving T-Mobile relative autonomy in the U.S. consumer and SMB space. However, Deutsche Telekom is a sizeable and successful regional provider of telecoms services of all kinds in Germany and surrounding countries in Europe, and is the parent of T-Systems, a successful IT service provider that offers a wealth of enterprise solutions in 50 countries.
So, would a combined Sprint and T-Mobile become an enterprise powerhouse that would be a significant enterprise services competitor to rivals AT&T and Verizon? Quite possibly. It may depend on whether parent DT gets its way in maintaining control over the merged company. With DT at the helm, it is likely that a robust and comprehensive enterprise mobility product set and a revitalized Internet of Things portfolio would be part of the picture. Given both companies’ current positions as ‘value’ leaders, this portfolio might be combined with an aggressive posture on providing innovative T-Mobile-like value to larger businesses, with unlimited plans, cost-effective service bundles and a posture of being ‘easier to do business with.’ Combine this with global IT and telecom services and, yes, a merger could evolve to threaten the Big Two.