T-Mobile's move to scoop up low-band frequencies to add to its wireless spectrum appears more forward looking and a French wireless carrier's bid to acquire the U.S. telecommunications company seems more realistic, now that Sprint has rescinded its proposal to buy the U.S. mobile market's fourth-ranked carrier.
Fearing its bid to buy T-Mobile would end at a regulatory blockade, much like AT&T's offer, Sprint and SoftBank have taken their offer, $32 billion at $40 per share, off the table, thus ending their 9-month pursuit of T-Mobile.
While the U.S. mobile market's four-carrier race won't shrink into a three-company fun run, Sprint and parent SoftBank will have a lot of running to do to catch up with the top two players. Craig Moffett, a research analyst at MoffettNathanson, said he now expects a lot of network enhancements and price cuts from Sprint.
"They have a lot of wood to chop," said Moffett. "They will have to spend a fortune to fix their network, and they will very likely have to cut prices to stay competitive at the same time."
Sprint Chairman Masayoshi Son reiterated his company's belief that consolidation would have enhanced competition. It isn't unlikely that the combination of Sprint and T-Mobile, the third- and fourth-ranked wireless carriers, respectively, could have placed a bit more heat on the top two companies, No. 1 Verizon and runner-up AT&T.
"While we continue to believe industry consolidation will enhance competitiveness and benefit customers, our focus moving forward will be on making Sprint the most successful carrier," said (subscription required) Son.
In the aftermath of SoftBank's announcement stating it would end its pursuit for T-Mobile, Sprint's stock fell by 18 percent, down to $5.98 per share -- it was said to be the largest plummet since SoftBank acquired Sprint. T-Mobile shares dipped by approximately 6.3 percent, trading at $31.78 per share.
"The deal never had a chance in Washington," research analyst Moffett said. "Sprint seems finally to have accepted the inevitable."
Known as disruptor to France's wireless industry, with it cut-rate calling plans and handset subsidies, Iliad may put a bit of pressure on Sprint and SoftBank with its significantly lower bid for T-Mobile. While offering only $15 billion and promises of millions in synergies, outsider Iliad stood, and still stands, a much better chance of gaining favorable nods from regulators in its bid to buy T-Mobile.
Meanwhile, T-Mobile's purchase of low-band spectrum back in June 2014 may be put to use instead of being sold off. The acquisition of the low frequencies gave T-Mobile the ability to penetrate concrete jungles, making the carrier more reliable for urban users.
