You gotta love this guy. Or do you? Referring to the Department of Justice’s challenge to the AT&T + T-Mobile USA merger, Sprint CEO Dan Hesse (mug shot to the right} claims,
I don’t believe that what the DOJ said in any way, not even a little bit, should be viewed as we want to keep four [major telecom carriers] …. My view is [the DOJ] would look at other consolidation very differently.
What is he saying? According to another report, Hesse believes,
[Y]ou could make a very, very strong argument, I believe, that if you have two value players that, let’s say, got together, that gave them more scale and a better cost structure to compete with the twin Bells, that is an advantage that outweighs having a smaller three and four.
This report notes that Sprint and T-Mobile did discuss a merger earlier this year before the AT&T deal was announced.
Does Hesse speak for the Department of Justice? Is the DOJ trying to help Sprint acquire T-Mobile at less than AT&T is willing to pay? Has Sprint bought the DOJ? What is going on here?
We know that T-Mobile faces a bleak future on its own. According to Verizon CEO Lowell McAdam,
I have taken the position that the AT&T merger with T-Mobile was kind of like gravity. It had to occur, because you had a company with a T-Mobile that had the spectrum but didn’t have the capital to build it out. AT&T needed the spectrum, they didn’t have it in order to take care of their customers, and so that match had to occur.
An AT&T + T-Mobile merger makes sense because both networks rely on compatible technology. Sprint utilizies an incompatible technology. You would think Sprint’s management would grasp the challenges incorporating incompatible networks. After all, Sprint’s merger with Nextel — which had an incompatible network — was a disaster. Maybe Sprint’s executive team is simply desperate. Out of ideas. Willing to try anything. Bet the company on the lobbyists, why not? Maybe this is a Hail Mary pass.
Well, Sprint has a lot of potential, even if it is not currently generating increasing quarter-over-quarter returns that justify rich paydays for its executives. This is not the fault of T-Mobile of AT&T. Sprint has simply not discovered a winning business formula yet.
Maybe Sprint’s executives are blind. But its Board of Directors should understand that inviting government intervention is a double-edged sword. Government intervention may be temporarily helpful if you are a struggling underdog, But it could kill you once you become successful. Who do we want to run businesses, politicians or MBAs?
Government should protect our liberties, not try to promote superior social and economic outcomes. Those efforts usually result in failure. Government usually is not the solution. Usually it is the problem.
Sprint’s reliance on government indicates that the company bereft of vision. It has no clue how to compete.