Following yesterday’s news of MetroPCS and T-Mobile declaring intent to perform a reverse merger, Bloomberg is now reporting that Sprint is preparing a counter offer for MetroPCS, following the initial botched purchase attempt orchestrated by CEO Dan Hesse that was shut down at the last minute last February.
The new offer hinges on Sprint either taking it publicly to Deutsche Telekom before the completion of the transaction that started yesterday, or waiting until the already announced merger is actually complete during the first half of next year, by which time Sprint would then make the new offer for the newly merged entity.
While the Sprint deal would make more sense on a strictly financial level given the increased level of return for stockholders and shareholders, the actual integration of MetroPCS with Sprint would lead many to remember the numerous errors in attempting to integrate Sprint and Nextel from both a technology and culture standpoint.
Sprint also has nothing to gain from MetroPCS in terms of technology or spectrum assets either, as Sprint does not utilize AWS for its LTE network and is already planning on rolling out LTE on a combination of 1900MHz and 800MHz with Clearwire’s own holdings acting as a third option for LTE-Advanced access, which leaves very little room for any AWS integration, unless the idea is to leave MetroPCS standing as a retail brand, which is highly unlikely. The only gains Sprint would see from the purchase would be MetroPCS’ minimal PCS holdings, which already overlap with its own holdings in many of the cities the regional carrier finds itself in.
For Sprint to make the offer public now, while Deutsche Telekom has already committed to the MetroPCS/T-Mobile tieup would also show weakness on the part of the carrier as it continues to complete its Network Vision initiative, since going back and making a counter offer means that they made a grave error in not allowing the initial purchase to go ahead as planned and makes the Board of Directors look worse than it already did when it halted the deal. Sprint has to play this delicately, to put it in the most diplomatic way, otherwise the carrier risks being overtaken by the new T-Mobile, or worse, being left further behind than it already is in terms of marketshare.