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Thread: The final obstacle to the T-Mobile/Sprint Merger Begins Tomorrow

  1. #496
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    Quote Originally Posted by Jack Hagar View Post
    It makes perfect sense. They only bought Sprint because they though they could merge with Sprint but misread the situation in the US especially under Obama. After Trump got elected they tried again. They never had the intention of operating Sprint as is. They wanted the merger with T-Mobile and move to 3 carriers with them in charge. In which case the for sure would have raised prices. On the 2nd try they knew the only way a merger would work is if they capitulated to allow T-Mobile to be in charge. If they lose in court T-Mobile will give up instead of appealing and Sprint will be left hanging because Softbank will in no way invest in Sprint. They will raise price/fees cut jobs and close stores. Eventually they will sell off markets. If they survive at all it will be as a regional carrier. They might limp on for another decade by slowly selling off spectrum in areas they do not plan on serving anymore
    I fully agree with this analysis.


    Quote Originally Posted by hofonewb9 View Post
    I don't get why TMobile, I guess fans is the right word, are trying to bash softbank. Softbank will own 27% of TMobile if the merger passes, and could hypothetically one day buy enough shares to become majority owner if they could secure that deal, which seeing how Son operates, could I see him pursue that one day? Yea, I could. D.T. isn't keeping a 50% stake in the combined entity so it is possible for them to do without ever buying a share from D.T. So why the attempt to tear them down? Lol don't get it.
    What's to get? The general consensus is Sprint has not been a good investment for Softbank. In 2013 Softbank out bid Dish for both Sprint and Clearwire. You think in hindsight Son thinks it was worth it? Of course not. Charlie could have been stuck with the problem of both companies back then.

    So if it wasn't a good investment why wouldn't he be bashed for that? So what if he'll have a minority interest in the company. And yes, technically you're correct that he could buy more shares and get a controlling interest in the company. But the likelihood of that is very low as that would drive the stock price higher if he even tried that. And DT being in control, could maneuver to buy more shares as well. I think DT has Son and Softbank boxed in pretty well in the current deal. Aside from his board seats, he's going to stay out of the way and let the DT boys run it. If their good management track record continues, he'll see his shares continue to rise and that's what he wants.

  2. #497
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    Quote Originally Posted by hofonewb9 View Post
    What if Sprint continues on their current path, never really turning a huge profit, but serving mainly urban areas and bringing in 8-9b a quarter in revenue. Why is that worse than 3 Verizon sized carriers controlling the market?
    8-9 billion revenue a quarter leaves out the net losses in most quarters. If the company was "never really turning a huge profit", that's one thing. But net losses are a killer. Especially when they have big debts and they're in a business that requires huge CAPEX investment to really compete. It's not sustainable.

  3. #498
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    Quote Originally Posted by elecconnec View Post
    "Tanked" from what? The $3 price in 2016?

    Sprint has bounced between $3 and $10 for a very long time. It artificially jumped to $8 or so when the merger was announced, and now it's back where it was- between $5-6.

    In fact, for all the doom and gloom here about Sprint's long term prospects, the stock has been stubbornly stable for years. I bought my couple hundred shares years ago at $6. (I was in a weird mood several years ago and decided to add a little stock of each major carrier to my Roth IRA one year.)




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    $3-$10 isn’t much better. That is actually really bad if it has been like that since 2016.

  4. #499
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    Quote Originally Posted by elecconnec View Post
    Why does "everyone lose" if the status quo is maintained? T-Mo has never been able to compete on an even playing field with AT&T and Verizon before. Why is it suddenly critical that they do now? They compete currently by offering an inferior product at inferior prices. I want people to keep having the option to buy terrible plans for low prices!

    it's about the number of carriers; it's about their relative size/strength.


    My logic is fairly simple. Three roughly equivalent carriers will charge roughly equivalent prices for roughly equivalent service. See top tier airlines (United, Delta, American, etc.) as an example.

    Two roughly equivalent "big" carriers and two "small" ones (or even just one if Sprint disappears) *can't* charge equivalent prices- the lesser carriers have to charge less than the top tier ones to attract customers- see lower tier airlines (Frontier, Spirit, etc.) as examples.

    Wireless needs a McDonald's for those of us willing to get less for less money. Putting all wireless carriers on an even "steakhouse" pedestal means the end of cheap happy meals for everyone!



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    The fast food model doesn’t work unless all of them are sharing the same handful of cows. You can mate cows to create more meat. Wireless spectrum that is good for mobile phone service is a scarce resource.

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    The final obstacle to the T-Mobile/Sprint Merger Begins Tomorrow

    Quote Originally Posted by noton View Post
    This is my point of view exactly. I can't afford to eat steak regularly. T-Mobile and Sprint serve a value oriented market. I think this market should not be disturbed with a merger.
    I might argue that Sprint’s goal used to be to have the fastest, clearest, most technologically advanced network and their target market was Business and higher revenue users. The low-priced budget network idea is a more recent innovation in the last few years because they are struggling since the merger with Nextel.

    On the flip side T-Mobile was a budget carrier at the beginning with the 1000 minutes / 1000 texts for $39.99 etc. when everyone else gave you only 400 minutes. T-Mobile’s current technology and network push is more recent since the post AT&T merger breakup. They used to have Edge most places and very little 3G. Now they are beating Verizon & AT&T in some tests with LTE.


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    Quote Originally Posted by jet1000 View Post
    8-9 billion revenue a quarter leaves out the net losses in most quarters. If the company was "never really turning a huge profit", that's one thing. But net losses are a killer. Especially when they have big debts and they're in a business that requires huge CAPEX investment to really compete. It's not sustainable.
    Net losses are only a killer if the shareholders deem them to be. Softbank doesn't seem to mind high priced subsidiaries who turn no profit.

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    Quote Originally Posted by jet1000 View Post
    I fully agree with this analysis.




    What's to get? The general consensus is Sprint has not been a good investment for Softbank. In 2013 Softbank out bid Dish for both Sprint and Clearwire. You think in hindsight Son thinks it was worth it? Of course not. Charlie could have been stuck with the problem of both companies back then.

    So if it wasn't a good investment why wouldn't he be bashed for that? So what if he'll have a minority interest in the company. And yes, technically you're correct that he could buy more shares and get a controlling interest in the company. But the likelihood of that is very low as that would drive the stock price higher if he even tried that. And DT being in control, could maneuver to buy more shares as well. I think DT has Son and Softbank boxed in pretty well in the current deal. Aside from his board seats, he's going to stay out of the way and let the DT boys run it. If their good management track record continues, he'll see his shares continue to rise and that's what he wants.
    The general consensus from whom? Analysts who have no stake in the company? Opinions from people on message boards?
    As far as the likelihood of that being very low, I suggest looking at what softbank has done in the past with subsidiaries they own minority stakes in. It appears buying up majority shares as a cash investment into their subsidiaries is a pretty common occurrence in their playbook. What you think they have is irrelevant, it's totally up to what softbank feels they want to do. D.T. could also buy up more shares correct, what in their history suggests they will do this though? History is a much better indication of the future, then analysts and message board propaganda.

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    The final obstacle to the T-Mobile/Sprint Merger Begins Tomorrow

    Quote Originally Posted by hofonewb9 View Post
    https://www.theverge.com/2019/12/23/...ger-assessment

    Appears the states were allowed to introduce this into evidence. Not sure how this goes over with the judge. My optimism for a settlement has now went down lol people thinking the states went into this ill prepared are incorrect. They definitely did their homework.
    Wow, T-Mobile has a plan B, C, D and maybe E too. A Comcast Merger sounds scary to me as well. However, as alarming as the article is, if we were in T-Mobile’s shoes wouldn’t we be looking at all available strategies. T-Mobile has some major momentum going right now, but they are concerned their organic growth will stagnate. Sprint seems like a really good partner for T-Mobile. But selling out to Comcast later?...only if Comcast undergoes some major reform. Then again we all complain about Comcast, but when they come out with 1Gig service we all want it (thanks to some Google disruption there)?

    Also people are really liking Xfinity wireless.

    Also not sure we need all the European regulations... I understand European networks can be kind of slow and crummy.


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    Quote Originally Posted by hofonewb9 View Post
    Net losses are only a killer if the shareholders deem them to be. Softbank doesn't seem to mind high priced subsidiaries who turn no profit.
    They certainly have seemed to mind that Sprint turns no profit. That's why they've been so aggressive at trying to merge Sprint. They tired during the Obama administration and was told no. They tried again during the Trump administration and had to make concessions just to get this far.

    Quote Originally Posted by hofonewb9 View Post
    The general consensus from whom?
    Look at the math. Take the $21.6 billion SoftBank spent to acquire Sprint when they outbid Charlie. Add the additional money they invested in the company since then. And then look at their value of their investment at today's stock price. They have no return whatsoever on this investment by any measurement.

    As far as the likelihood of that being very low, I suggest looking at what softbank has done in the past with subsidiaries they own minority stakes in. It appears buying up majority shares as a cash investment into their subsidiaries is a pretty common occurrence in their playbook.
    These subsidiaries didn't have an investor who owned 42% and who didn't want to lose control. If DT eventually wanted to sell some of their investment, SoftBank would be a possible buyer. But at this point, if SoftBank wanted to increase their share from 27% to 51% they would realistically need DT's consent. If they didn't have it, it would essentially be a hostile takeover bid. Sure SoftBank could make an offer to the public that own the 31%. However, DT could make a counter-offer and since their in control, they also can take other measures to thwart a SoftBank bid.

    Softbank at this point just wants to get this merger done and get this albatross of Sprint onto somebody else's neck.

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    Quote Originally Posted by jet1000 View Post
    They certainly have seemed to mind that Sprint turns no profit. That's why they've been so aggressive at trying to merge Sprint. They tired during the Obama administration and was told no. They tried again during the Trump administration and had to make concessions just to get this far.



    Look at the math. Take the $21.6 billion SoftBank spent to acquire Sprint when they outbid Charlie. Add the additional money they invested in the company since then. And then look at their value of their investment at today's stock price. They have no return whatsoever on this investment by any measurement.



    These subsidiaries didn't have an investor who owned 42% and who didn't want to lose control. If DT eventually wanted to sell some of their investment, SoftBank would be a possible buyer. But at this point, if SoftBank wanted to increase their share from 27% to 51% they would realistically need DT's consent. If they didn't have it, it would essentially be a hostile takeover bid. Sure SoftBank could make an offer to the public that own the 31%. However, DT could make a counter-offer and since their in control, they also can take other measures to thwart a SoftBank bid.

    Softbank at this point just wants to get this merger done and get this albatross of Sprint onto somebody else's neck.
    So I'll take that as a no? There is nothing from either companies past that suggests your scenario to actually be true, except you saying it is. Yea, that's the same conclusion I reached as well. Thank you for validating my thoughts.

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    Quote Originally Posted by hofonewb9 View Post
    There is nothing from either companies past that suggests your scenario to actually be true
    That's false. As I stated, "These subsidiaries didn't have an investor who owned 42% and who didn't want to lose control." You did not dispute that.

    But I'm not required to accept your premise that "History is a much better indication of the future". That's why I presented an analysis of how I arrived at my conclusion.

    If you believe that SoftBank will mount a takeover bid TMUS, you've presented little information as evidence for that. Nor do you describe how SB would overcome the barriers to a takeover that DT would likely present as I mentioned.

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    Quote Originally Posted by jet1000 View Post
    That's false. As I stated, "These subsidiaries didn't have an investor who owned 42% and who didn't want to lose control." You did not dispute that.

    But I'm not required to accept your premise that "History is a much better indication of the future". That's why I presented an analysis of how I arrived at my conclusion.

    If you believe that SoftBank will mount a takeover bid TMUS, you've presented little information as evidence for that. Nor do you describe how SB would overcome the barriers to a takeover that DT would likely present as I mentioned.
    Well obviously you aren't going to accept the premise of history is a better indicator of the future over message boards, you are literally arguing no matter if the history of the 2 companies strongly disagree with what you "predict" will happen, it will still happen just because....reasons. got it. I got your opinion on the matter.

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    Quote Originally Posted by hofonewb9 View Post
    you are literally arguing no matter if the history of the 2 companies strongly disagree with what you "predict" will happen,
    The history of the two companies don't parallel with an example using a company the size of $87 billion and Softbank taking a majority interest when another party controlled 42% and wasn't interested in relinquishing it.

    The history you're talking about is Softbank acquiring majority interests in much smaller subsidiaries whose shareholders were interested in selling.

    So there's no parallel in this case that makes the historical information relevant.

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    Quote Originally Posted by jet1000 View Post
    The history of the two companies don't parallel with an example using a company the size of $87 billion and Softbank taking a majority interest when another party controlled 42% and wasn't interested in relinquishing it.

    The history you're talking about is Softbank acquiring majority interests in much smaller subsidiaries whose shareholders were interested in selling.

    So there's no parallel in this case that makes the historical information relevant.
    No, softbanks history shows they are not just happy holding 2 seats on a board and hiding in the background as you suggested. Their history in fact suggests just the opposite, but I'm sure this instance will be different, for reasons I guess. As my original statement said, softbanks history suggests they increase ownership over time on their investments and I wouldn't be shocked to see them follow this trend again.

    As far as your previous statements of SoftBank making bad choices, this and that, what you feel Son regrets. I doubt he has many regrets with his business style or investments to be honest. It's worked out well for him I'd say. I doubt he cares too much how anonymous people on a message board feel about his investments or choices.
    Last edited by hofonewb9; 12-25-2019 at 08:10 PM.

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    Quote Originally Posted by elecconnec View Post
    Why does "everyone lose" if the status quo is maintained? T-Mo has never been able to compete on an even playing field with AT&T and Verizon before. Why is it suddenly critical that they do now? They compete currently by offering an inferior product at inferior prices. I want people to keep having the option to buy terrible plans for low prices!

    it's about the number of carriers; it's about their relative size/strength.


    My logic is fairly simple. Three roughly equivalent carriers will charge roughly equivalent prices for roughly equivalent service. See top tier airlines (United, Delta, American, etc.) as an example.

    Two roughly equivalent "big" carriers and two "small" ones (or even just one if Sprint disappears) *can't* charge equivalent prices- the lesser carriers have to charge less than the top tier ones to attract customers- see lower tier airlines (Frontier, Spirit, etc.) as examples.

    Wireless needs a McDonald's for those of us willing to get less for less money. Putting all wireless carriers on an even "steakhouse" pedestal means the end of cheap happy meals for everyone!

    Sent from my moto x4 using Tapatalk
    I don't think that T-Mobile wants to continue as a lower-cost inferior carrier forever. The ability to charge higher prices is dependent on them making large capex, and the ability to make large capex is dependent on being able to charge higher prices.

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