SoftBank Gets Sprint , But Still Far From Finish Line
NEW YORK ( TheStreet) - Congratulations to Masayoshi Son of SoftBank, who is poised to take control of Sprint
Fortunately or unfortunately for shareholders and U.S. wireless consumers, however, SoftBank's work has just begun after the Japanese firm soundly outmaneuvered a competing proposal for Sprint by Charlie Ergen-chaired Dish Network
While Ergen is no pushover and Dish Network remains a credible threat to wireless industry status quo, SoftBank's battle against the card playing Dish chairman is likely to pale in comparison to the fight Sprint will have to put up to win back subscribers from AT&T
Consider that despite the worst recession since the Great Depression and Sprint's endless promotion of low-priced unlimited smartphone data plans, U.S. wireless subscribers nonetheless spent recent years moving to the higher-cost and tiered data plans offered by AT&T and Verizon. Whether Sprint, under the control of Masa Son, or a recently merged MetroPCS and T-Mobile
Simply put, the viability of low cost smartphone data plans is still very much up in the air. Industry consolidation has given Sprint and T-Mobile far better prospects than a year ago; however, both companies will remain uncertain corporate turnarounds until they can show consistent subscriber growth and sustainable profitability.
Also, Sprint still needs to pass a Federal Communications Commission review of its merger with SoftBank and the company is working to close a $5 a share acquisition of Clearwire
If Sprint and T-Mobile can win back subscribers in coming quarters, it could indicate monthly wireless bills are poised to drop, after the rising price for some individual and family plans approaches the size of monthly auto loan payments. Such a scenario, coupled with execution on wireless network upgrades, could eventually pose a threat to the profit margins of AT&T and Verizon.
It is unlikely AT&T and Verizon are looking at Sprint, the third leading wireless carrier, and T-Mobile, the industry's fourth player in fear... At least not yet.
Verizon, after all, continues to fan speculation it is ready to buy a 45% stake in Verizon Wireless from joint-venture partner Vodafone
About this time two years ago, many U.S. wireless industry customers were bracing for the eventual duopoly of AT&T and Verizon, after both telecoms scrapped their unlimited data plans. However, given the Department of Justice's insistence upon at least four competitive nationwide providers such fears may prove unfounded--especially in the wake of Sprint and T-Mobile's merger efforts.
Masa Son was able to break SoftBank into the state-controlled Japanese broadband and telecom sectors through aggressive price promotion and merger activity, and he may make a similar move in the U.S. with Sprint. Amid a fractured relationship between global handset makers and wireless service providers, Son's credibility in Silicon Valley through SoftBank's investment in the likes of Yahoo!