Rumors about potential mergers are often a hot topic in the business press. One rumor being floated around recently is a potential merger between mobile phone giants T-Mobile and Sprint. Mergers between two large companies are always complicated, but some have noted the possible synergies in 4G technologies that might be possible in such a merger.
Mergers can bring about great rewards, but also can bring great risks and pitfalls. Do some research concerning the arguments both for and against such a merger from a financial perspective. Don't be too concerned with how consumers may fair, as this is an issue for the government to consider if they have to approve this merger. Instead you are considering this from the point of view of whether or not such a merger would be a profitable undertaking that would add value to the shareholders of both corporations.
Do you think a merger between Sprint and T-Mobile would add value to the shareholders of both corporations?
The main focus of this assignment will be answering the question above. In your answer to this primary question, consider the following issues:
1. The impact on T-Mobile shareholders
2. The impact on Sprint shareholders
3. The financial condition of both corporations
4. Why might T-Mobile and Sprint combined as one company be more profitable than they would if they remain independent?
5. Potential pitfalls - might the combined entity actually be less profitable than either company operating independently?
The possibility of a merger between wireless providers is always filled with questions concerning the viability of the newly formed company. Considerations have to go well beyond increasing the newly formed company's subscriber base. Compatibility of technologies, wireless regulations, synergies between each carriers licensed markets, upcoming technologies, and the financial health of each carrier play a major role in determining the feasibility of a potential merger between wireless carriers. Over recent years, the United States has seen successful mergers between AT&T and Cingular Wireless, now AT&T Wireless. We've also seen a successful merger between Bell Atlantic and GTE Mobilnet, now Verizon Wireless. Both AT&T and Verizon went through pain staking steps to merge technologies, divest licensed markets that were seen to inhibit competition by the department of justice, and merge human resources. The foundations of both of these mergers lie in the fact that participants in the Verizon and AT&T merger had synergies that would make the combined companies better than if they were to remain stand-alone companies. The wireless market now dictates that mergers need to be considered in order for a carrier to remain competitive. Wireless companies work on an economy of scales with the network being the asset. This simply means the ...
Mergers in the wireless industries are never easy, but must always be on the table in order for companies to stay competitive. Sprint and T-Mobile definitely have synergies that make them compatible, but the technology differences can either be a pitfall or an opportunity for them. This solution discusses these synergies and potential pitfalls for a merger between the two corporations. This solution is 816 words.