The news of the day is that Masayoshi Son, CEO of Softbank (SFTBY) is calling off the merger with T-Mobile (TMUS) because he doesn’t want to give up that much control over the new organization. While that makes sense, I have to wonder if this is just a negotiating tactic to get more control over the combined company.
Will the merger negotiations continue? There is a battle for dominance being played out between these two players, but which is the biggest battle. Is it John Legere, CEO of T-Mobile vs. Masayoshi Son of Softbank, or is it a wireless world war in the USA between Germany and Japan with Deutsche Telekom (DTEGY) vs. Softbank. The personalities of both sides seem bigger than life.
John Legere, CEO of T-Mobile Has Competitive Advantage over Sprint
With that said, right now I have to say John Legere and T-Mobile has a competitive advantage over Sprint (S). Legere and his bigger than life attitude saved T-Mobile over the last few years. The company was dying until Legere entered the scene, threw insults around like Halloween candy and built the company. He has punched his way onto the wireless industry over the last few years with his over the top, highly visible presence.
Masayoshi Son has a powerful and growing world-wide reputation for growth. That kind of growth requires a savvy negotiator. It’s not unlike President Donald Trump. His reputation in business in the decades leading up to today says one thing. He is a hell of a negotiator and often ends up on the winning side.
These two, top players are going head-to-head in the wireless battle of the century.
T-Mobile Has Competitive Advantage Over Sprint
Which carrier needs this merger most? While both can use the increased size and scope, Sprint needs it more than T-Mobile. The reason is simple. T-Mobile under the leadership of John Legere was crashing and burning, but the growth curve achieved under Legere has been impressive. Sprint, after being acquired by Softbank has also seen growth in recent years, but that growth is not nearly as dramatic.
What that means is, T-Mobile will continue to grow, with or without Sprint. Can Sprint say the same thing? If you asked me that question yesterday, I would say they had the same chance for success. However, Sprint has not yet cracked the code for growth. They are not yet living up to that promise.
Can Sprint Grow Without T-Mobile?
That’s why I am not sure Masayoshi Son is ready to walk away from a merger with T-Mobile. That’s why I wonder if he is playing the negotiating game. Remember, he is a successful negotiator.
Son understands that, he who wants the deal more, loses. I think he is hoping that by pulling away, T-Mobile will do the chasing. He hopes to finally achieve a competitive advantage.
So, who will flinch first, T-Mobile or Sprint? Whoever flinches first, loses. Whoever has the balls to stick to their position, wins. In that case, I think Sprint needs this deal much more than T-Mobile. We’ll just have to wait and see what happens next. Bottom line, don’t think Masayoshi Son is done. Not yet anyway.
Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan.