MERGER BETWEEN SPRINT AND T-MOBILE In the United States, carriers’ competition has gradually increased to what can be termed as fever pitch. Concerning iphone 4 versus droid X, and maps versus application, Verizon Wireless and AT&T has collided head on head due to the competition…
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because the two carriers have been struggling with the churn which has resulted to the two companies losing grounds to the Verizon Wireless and AT&T carriers. The merger will help in finding a spectrum path in succeeding. For the purposes of Deutsche Telekom to grow T-mobile, the best strategy may be to merge because as it was seen, the strategy worked for Verizon when it took over Alltel. This merger will offer T-mobile an opportunity to offer new services, gain new customers, and also present an opportunity for expansion. The financial position of Sprint reported a Q4 net loss and an operating revenues drop of 14 percent over the past years period. This issue of finance is mostly important to T-mobile parent which is Deutsche Telekom DT and thus a merger with a US carrier is the best strategy. T-mobile suffers from a lack of compelling products and services and thus it is hindered from competing in an effective manner. A merge possibly with an existing carrier is therefore the fastest way that will help T-mobile to penetrate today’s market and grow. Based on the current size, the combination of Sprint and T-mobile will accumulate a close of a total number of 82 million subscribers and annual service revenues of $11 million. There are 11 million more subscribers in Verizon wireless and 5 million more subscribers in AT&T carrier (Butcher, 2011) Due to slightly lower ARPUs, there will be much work that needs to be done on the merger so as to catch up with the carriers that are on the top two because both Sprint and T-mobile are running above twice the churn in monthly estimates of the two leading carriers. This means the carriers are operating at above 3 percent against 1.5 percent. Deutsche Telekom AG was holding talks to Sprint Nextel Corporation to sell its T-mobile USA, a major stake in the entity that is combined as the consideration. A deal might as well not be agreed upon because these negotiations have been on and off for a sometime. The T-mobile USA valuations haven’t been agreed upon by the companies because the company reported a decline in its reported profits. The merger involving Sprint and T-mobile of USA brings together, a third and fourth largest wireless provider in U.S. These companies are behind Verizon Wireless and AT&T Inc. The net worth of T-Mobile of U.S was between $ 15 and $ 20 billion. The sprint net worth was $13.6 billion. The price of Sprint, the acquirer may disappoint Deutsche Telekom because the buyer may pay less reason being customer losses. Basing on the unit’s earnings, the company may expect about $25 billion (Saitto et al, 2011) Considering Verizon wireless has 93 million subscribers, AT&T has 85 million subscribers, a combined sprint and T-mobile will put them behind a third placed carrier which is very strong with about 82 million. This puts them in a very competitive position of becoming the second positioned carrier. T-mobile has a sales price of $39 billion which is three times its net worth of $13 billion. This means that it would result to Sprint having more debts of worth billions which will increase its total leverage. Market capitalisation of sprint has ranged between $13 billion to around 16 billion since the merger was announced. Sprint will thus be required to borrow billion of dollars to fund the merger which will double its current leverage of $20 billion of long term debts. By year 2010, sprint had 138 percent debt to equity ratio meaning purchase of T-mobile would
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The vision of the company is to attain a sustainable growth rate in the global telecom arena while providing high quality services to its customers all over the world. The brand promise of the company is the belief of the company that life’s happiness depends on sharing with others.
Merger and acquisition serve strategic objectives. A merger takes place when two organizations of about equal size combine to form one enterprise (David, 2005, p. 213). On the other hand, acquisition occurs when a large corporation, commonly known as acquirer, acquires a smaller corporation, or vice versa (David, 2005, p. 213).
One of the most notable mergers that have recently been announced involves AT&T and T-Mobile companies. AT&T is an American based telecommunication company that provides mobile telephony and data services (Kleinfield 13). On the other hand, T-Mobile is a German based firm with subsidiaries in Europe and US.
Introduction In the month of March, 2011, AT&T announced the decision of purchasing T-mobile. Within 5 months the antitrust division of United States Department of Justice announced the standpoint of blocking the takeover and moved to the federal court and the bid was abandoned by AT&T on December in the same year (Goldfarb, 2011).
Introduction The announcement of the merger was made in March, 2011. The antitrust division of United States Department of Justice made itself clear on blocking the merger on antitrust grounds. They moved to the federal court and ultimately in the last month of the same year the merger was finally abandoned by AT&T.
Telephone services in the United States are characterized by a healthy competition between four national operators namely AT&T, T-Mobile, Verizon, and Sprint. Each communication company offers tailored services to their subscribers in accordance to their mission and vision.
Transfer of the rights to company products and services can now be successfully done online. This is done using mobile devices, for example, PDA, smartphones, custom terminal, mobile phones and public mobile network. These have had a positive impact in
T-Mobile also offers wireless Internet access as well as other data services in retail business and airports using its HotSpot brand. The company involves itself with the resell of PDAs, phones, and related accessories from
The two entities had not anticipated that their union would be as short-lived as it came to be; the merger was terminated three years after it began with little to show for its existence. Overall, it may be stated that the merger failed
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