It has been nearly five years since Japan’s Softbank bought a controlling interest of deeply troubled U.S. wireless carrier Sprint Corp. (NYSE: S). Marcelo Claure was made chief executive officer of Sprint in 2014. For some reason, the board thought he was a gifted turnaround artist. A year later, T-Mobile US Inc. (NYSE: TMUS) passed Sprint to become the nation’s number three carrier by subscription count. Today, even with a buyout offer from T-Mobile, Sprint’s stock is collapsing. Wall Street believes if the deal does not close, Sprint cannot carry on by itself.
Sprint has little it can do by itself to improve its station among the four U.S. carriers, which include AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). It does not have the war chest to greatly improve its network as the industry swings to 5G. Its ratings for quality service are poor. It does not have the kind of marketing resources the other three have. Finally, it does not have much of a brand. Among the rating research done by BrandZ, among U.S. brands, AT&T’s value is $114 billion, Verizon’s is $87 billion, T-Mobile’s is $16 billion and Sprint’s is $13 billion.
The largest single question about the T-Mobile decision is whether it can integrate a complex company, improve its brand and service and begin the process of increasing the subscriber base of both entities. However, Wall Street has not gotten that far. Sprint’s shares are down 13% since the merger announcement to $5.66. Its shares have tumbled 38% in the past year.
Investors have a right to worry about whether Softbank will continue to have much interest in Sprint if the government blocks the T-Mobile deal. Softbank CEO Masayoshi Son has dozens of other tech investments around the world. At some point, Sprint drops to the bottom tier of these in terms of future promise, if that has not happened already.
Analysts have handicapped the chance of government approval of the deal at 50% to 60%. That means the odds are high Sprint will be orphaned with so few resources that it cannot be a true competitor in the U.S. market at all.