Sprint is now the #4 national wireless service in the US behind Verizon, AT&T and T-Mobile and a leading provider of long-distance fixed line services. It was formed in 2005 from the merger of what were previously two separate but competing companies, Sprint and Nextel. The group also operates prepaid services Boost and Virgin Mobile. Sprint's local fixed line services in selected states were spun off to shareholders in 2006 as Embarq (now CenturyLink), but it still has a long distance wireline division. Despite initial hopes that the 2005 merger would allow the enlarged business to compete more effectively with its main competitors, Sprint Nextel's performance steadily declined over the next couple of years as customers jumped ship to other suppliers. There was finally a glimmer of light at the end of the tunnel in 2011 as the rate of loss, especially among valuable contract customers, slowed, allowing the group to report its first operating profits after years of deficit. The following year, Japanese mobile company Softbank made a surprise bid to acquire control of the business for $22bn. Additional potential mergers have been discussed since then. Talks have continued on and off with T-Mobile USA since 2013. These finally reached fruition in 2018 with an agreement for T-Mobile to acquire Sprint for around $26bn in stock. However, that arrangement faces a rough ride from regulators.
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Adbrands Daily Update 12th Jun 2019: A group of attorneys general from 10 US states threw a new spanner into the proposed merger of Sprint and T-Mobile USA, filing lawsuits opposing the deal. The suit is being led by New York and California with the stated goal "to stop the merger in its tracks". They argue that the combination of the 3rd and 4th largest mobile suppliers will lead to increases in price plans for consumers. This is "exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent," said NY AG Letitia James.
Adbrands Daily Update 20th May 2019: The chairman of the Federal Communications Commission threw an unexpected lifeline to struggling Sprint by offering his support to its proposed takeover by stronger rival T-Mobile USA. That followed further concessions offered by the two companies, including investment in wireless services for rural communities and in 5G infrastructure. Sprint has also offered to divest its secondary Boost Mobile brand. This doesn't yet amount to full approval by the FCC, but chairman Ajit Pai said he would recommend such a move to his four fellow commissioners. The FCC has always previously opposed any reduction in the number of national wireless carriers from four to three. The merger still faces opposition from the Justice Department whose approval is also required.
Adbrands Daily Update 17th Apr 2019: According to the Wall Street Journal, regulators have informed T-Mobile and Sprint that their proposed merger is unlikely to win approval in its current form, citing longstanding opposition to any consolidation in the US mobile market from four to three providers. Those reports raise considerably the pressure on Sprint, which warned this week that its current situation is unsustainable because of poor network infrastructure and continuing erosion of its customer base. In a filing to the FCC arguing the necessity for the merger, the company said "Sprint is in a very difficult situation that is only getting worse... [Its] network is deficient, it is losing customers, and it cannot generate enough cash to invest in its network, pay its debt obligations, and compete effectively." Yet, ironically, Sprint's current marketing promises "a brighter future for all". Itself excluded, apparently.
Adbrands Weekly Update 3rd May 2018: The proposed combination of mobile providers T-Mobile USA and Sprint is hardly a surprise. The two have been engaged in on-again off-again talks for the past five years in an attempt to build a stronger competitor to AT&T and Verizon, and rumours began to emerge of renewed discussions early last month. In the past, though, those negotiations have usually fizzled out as a result of disagreements over respective valuations of each business or the likelihood of regulatory opposition. The changing marketplace, primarily the need of both companies to invest in fast-emerging 5G technology to stay competitive, has added greater urgency to the situation. Under the proposed arrangement, T-Mobile USA will acquire Sprint for around $26bn in stock. The combined business will retain the T-Mobile USA name and will continue to be led by its admired CEO John Legere. T-Mobile's controlling shareholder Deutsche Telekom will end up with a 42% stake in the business, while Sprint's parent, the Japanese company Softbank, will have 27%. The remaining shares would be publicly held. The merged entity would manage around 100m direct retail customers (excluding MVNO or wholesale users), putting into second place between Verizon (currently 116m) and AT&T (93m). But - and it's a big but - the deal must still run the gauntlet of the regulators. In the past, the FCC has repeatedly voiced its support for four separate mobile providers in the US. However, investments by cable and technology companies in emerging 5G infrastructure promise to expand the number of potential suppliers significantly in coming years. Comcast is one such big new entrant in the market. "This isn't a case of going from 4 to 3 wireless companies," said T-Mobile's Legere this weekend. "There are now at least 7 or 8 big competitors in this converging market."
Adbrands Weekly Update 3rd May 2018: A few days later, Sprint announced annual results for the year to March. US tax reforms helped it to the highest profit in its history. Net income soared to $7.4bn (compared to a $1.2bn loss in the year before), including $7.1bn of one-off gains. However revenues slipped 3% to $32.4bn. At the same time, Sprint promoted new finance chief Michel Combes - a telecoms veteran who previously held C-suite roles at Orange, Vodafone and SFR - to the role of CEO, with incumbent Marcelo Claure moving up to executive chairman and COO of Sprint's Japanese parent Softbank.
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Free for all users | see full profile for current activities: Although the Sprint brand did not come to prominence until the 1970s, the company is actually one of the oldest of America's non-Bell telephone companies. It was founded in Kansas in 1899 by Cleyson Brown as The Brown Telephone Company. In the early years of the 20th century it became known first as United Telephone & Electric, then United Utilities after diversifying into nuclear power and cable TV, and finally United Telecommunications. Meanwhile, during the 1960s, railroad company Southern Pacific began turning its railway telegraph system into a long-distance telecoms service. This was spun off in 1970 as Southern Pacific Railroad Internal Telecommunications, or SPRInT for short.
The long-distance market opened up significantly following the break-up of Bell (see AT&T), and Sprint was acquired in 1983 by GTE, which then sold it on in several instalments during the 1980s to United. The group also began building the country's first wholly digital, national fibre-optic network which delivered significantly superior line quality, completed in 1987. United changed its name to Sprint Corporation in 1992. The following year, the company joined forces with Deutsche Telekom and France Telecom to create international telecoms provider Global One. The Europeans each acquired a 10% stake in Sprint in 1996, before falling out with each other over DT's attempted takeover of Telecom Italia. In 1993, Sprint merged with local rural provider Centel to establish a presence all three sectors of long-distance, local and wireless telecoms. The creation of a joint venture three years later with cable companies TCI, Comcast and Cox Communications gave the Sprint PCS wireless service a near-national footprint for the first time.
In the mean time, the relationship between the three partners in Global One had continued to deteriorate and in 2000, France Telecom took full control of that business. The same year, Sprint was targeted by rapacious dealmaker MCI Worldcom. Fending off rival bidder BellSouth, the partners agreed a massive $130bn merger, but it was blocked by regulators (in what was later to prove a lucky break for Sprint's shareholders). Despite its size, Sprint PCS was still regarded as one the country's weakest mobile operators, with a reputation for poor service. However newly appointed CEO Gary Forsee began turning performance around in 2003, with a series of initiatives, not least the partnership with Virgin. Rapid consolidation within the industry encouraged Sprint to enlarge its own presence, and the merger with Nextel was agreed at the end of 2004.
A much younger corporation, Nextel was founded in the late 1980s as Fleet Call by entrepreneur Morgan O'Brien. It rebranded as Nextel in 1993 and quickly established its own national cellular service by acquiring several smaller operators, as well as Motorola's wireless network in the US. This provided a sound platform for the launch in 1996 of a high quality digital network based on Motorola's iDEN technology. As well as cellular communication this gave users text and numeric paging as well as a walkie-talkie "push to talk" service, Nextel Direct Connect, which proved extremely popular with American users.
The merger of Sprint and Nextel appeared to offer significant benefits to both companies, but came with several problems as well. Not least of these was the technological challenges inherent in merging two wholly incompatible networks without alienating existing customers, especially of Nextel's popular push-to-talk service. The group was also forced to spend considerable amounts of cash to buy out various affiliate resellers around the US. It seemed at first that the advantages probably outweighed the disadvantages, provided the enlarged company could maintain Nextel's reputation for entrepreneurial and innovative services, as well as its high profit margins. That promise began to dissipate during 2006 after a sharp slowdown in subscriber growth. The merged company reported a loss of subscribers in four out of five quarters between mid 2006 and 2007. There were also reports of continuing friction within the company between rival factions from the two still separate Sprint and Nextel divisions, as well as between group directors drawn from each camp.
Chairman & CEO Gary Forsee resigned in October 2007 as a result of pressure from shareholders over the company's declining market share. Dan Hesse was eventually named as his replacement in December. Three other senior officers left the company in early 2008, including CFO Paul Saleh - who had been interim CEO until Hesse's appointment - and the chief marketing officer. See full profile for current activities
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