Wednesday, August 6, 2014

Sayonara to T-Mobile

We've always thought that Masayoshi Son was a breath of fresh air for the U.S. wireless industry. However, we had doubts about what he paid for Sprint and about the potential for a disruptive model in domestic wireless.  Then came the announcement of a proposed deal for T-Mobile, which surely had to attract regulatory scrutiny, not so much for its own merits, but probably because of regulatory "regret" about their having let the U.S. industry evolve into a classic duopoly, with higher priced plans than would emerge from more competition.

What Mr. Son hasn't done is to really "white board" the Sprint business model.  Now that our regulators have put the kibosh on the Sprint/T-Mobile deal, this is precisely what he should do.  Putting some billionaire in place as CEO is going to have investors scratching their heads.   Making a face saving announcement about regulators reconsidering won't make his Japanese shareholders happy, since Mr. Son's full time PR blitzkrieg in pursuit of the merger has distracted him from the core business in Japan.

Meanwhile, T-Mobile has attracted another billionaire, this time from France, who has made a merger proposal which looks long on words and short on both money and value-enhancing strategy.  With T-Mobile itself finally starting to grow its postpaid customer base again, the last thing it needs is another distraction for management and employees.

Wireless pricing continues its irrational ways, with T-Mobile recently announcing that it will allow data-hog users to stream music continuously without counting against their plan data limits. Now, it's possible that there's incremental revenue from the streaming services paid to T-Mobile for serving up their customers, but I'd like to understand the economics of this deal.

Until later, sayonara to T-Mobile from SoftBank.

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