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Sprint: Mergers on back burner, not off table

Thu, 05/17/2012 - 1:53pm
Maisie Ramsay, Wireless Week

Sprint plans to wait until it finishes upgrading its network before seriously considering merging with another company, but it is not altogether dismissing the possibility of a near-term deal, its top executive said.

Speaking at an investor conference Wednesday, CEO Dan Hesse said the company's primary focus through 2013 would be its $5 billion overhaul project, "then let's talk about consolidation in 2014 when we have all this behind us."

A merger sooner than that "is not ideal," in part because of Sprint's rock-bottom stock price, which has lost about half of its value since last summer, but it would consider a merger sooner than that if the "synergies" were right, Hesse said at the annual J.P. Morgan Global Technology, Media and Telecom Conference.

Hesse expressed confidence that the government was open to further consolidation in the wireless industry, even after the FCC and Justice Department blocked AT&T from acquiring T-Mobile USA.

Sprint was one of the most vocal opponents to the transaction, claiming it would give AT&T and Verizon a veritable “duopoly” hold on the market, but it maintains that mergers and acquisitions could be beneficial for other providers like itself.

“Washington would be receptive to consolidation to provide more balance" to the dominant position of AT&T and Verizon, Hesse said. "I honestly believe that both the DOJ and FCC have an open mind with respect to additional consolidation and want to see a competitive wireless industry."

Sprint was said to have been close to a merger agreement with MetroPCS in February, only to have its board of directors nix the deal at the last minute.

Hesse’s comments came after rumors circulated last week that AT&T had recently held merger negotiations with Leap Wireless International. Also making the rounds in the rumor mill was a report that Deutsche Telekom was considering merging T-Mobile with MetroPCS.

Mergers and acquisitions provide a quick path to growth for wireless operators in the mature U.S. market, where acquiring a new subscriber typically means luring it away from another provider.

The number of active devices outpaced the country's population at the end of last year, and though many executives have pointed to connected devices as a potential source of new customers, the saturation of the customer base limits operators’ potential for organic growth.

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