From Isamorph's linked article:
"Two sources told the financial newspaper Deutsche Telekom pressed Sprint owner SoftBank to reduce the price originally agreed almost two years ago, arguing the company’s share price and performance had since dropped."
....duh.... seems like both of those were givens, considering that folks started writing off Sprint when the merger plans were announced. It seems logical, and to T-Mobile's advantage if the merger should go through, for Sprint to avoid investing in changes/improvements to the network that would have been wasted funds if the merger went through.
I suspect that Deutsche Telecom is just playing hardball here to see what concessions they can get. A lot of experts believed that T-Mobile's interest in absorbing Sprint were 1) spectrum holdings & towers, 2) eliminating the cost pressure of a low end carrier, and 3) Sprint's customer base. It appears that the only thing on that 'short list' to have changed since 2018 might be the customer count, and it's likely that a significant portion of a decrease may been due to buzz about the merger.
Deutsche Telekom seeks changes to Sprint takeover terms
Pressure from T-Mobile US’s parent company threatens to delay or scupper $74bn deal
February 13, 2020 5:00 am by James Fontanella-Khan in New York, Nic Fildes in London and Miles Kruppa in San Francisco.
Deutsche Telekom, the parent company of T-Mobile US, is pressing to renegotiate the terms of the American wireless carrier’s takeover of Sprint, in a move that threatens to further delay or even scupper the 2018 deal that was given court approval this week.
The German telecoms company, which owns more than 60 per cent of T-Mobile US, wants to cut the price agreed for Sprint two years ago because the shares and performance of the company have deteriorated, said two people close to DT.
The move is opposed by Sprint’s controlling shareholder, SoftBank of Japan, according to people close to the its chairman Masayoshi Son.
The stand-off sets the stage for what could be a protracted and bitter battle to get the deal done.
After two years of regulatory limbo, a federal judge on Tuesday cleared the combination of the number three and number four mobile networks in the US without imposing new conditions. The ruling, in a case brought by a group of Democratic-led US states, endorsed the companies’ position that the acquisition creates a stronger competitor to larger rivals Verizon and AT&T.
Judge Victor Marrero said he dismissed the states’ competition concerns partly on the basis that Sprint risked going out of business if the deal collapsed.
“While Sprint has made valiant attempts to stay competitive in a rapidly developing and capital-intensive market, the overwhelming view both within Sprint and in the wider industry is that Sprint is falling farther and farther short of the targets it must hit to remain relevant as a significant competitor,” Mr Marrero wrote in the conclusions of his 170-page ruling.
The judge’s stark remarks about Sprint’s future have emboldened Deutsche Telekom in its view that it would be unacceptable to simply accept the terms agreed in 2018, said three people close to the company.
Under those terms, Sprint shareholders would emerge with a third of the combined company, but in the intervening period Sprint’s earnings before interest, tax, depreciation and amortisation have remained roughly flat while T-Mobile US’s are up around a fifth. The value of the offer has risen from $59bn in 2018 to $74bn now, including Sprint’s debt.
Before Tuesday’s court ruling, Sprint shares were trading at a 45 per cent discount to the implied value of the deal, but even after a sharp rise after the decision they remained at a discount of 12 per cent, implying the market remains wary about the deal’s prospects of closing on the 2018 terms.
T-Mobile US has the option to walk away because the long delay meant the deal formally expired towards the end of last year.
Most analysts believe the wireless company and its German parent have very little appetite to pull the deal entirely, however, partly because it needs Sprint’s spectrum to be competitive in the looming race for 5G.
“On the merits, there should be a substantial recut,” said Craig Moffett, a telecoms analyst at MoffettNathanson. “The ratio was overly generous from the beginning, and the deterioration at Sprint since then only argues more strongly for a renegotiation. The blow-ups at We Work and Uber also make it clear that SoftBank is negotiating from a weak position.”
But he added: “T-Mobile’s negotiating leverage entirely hinges on their willingness to walk away. And I don’t think anyone would take the idea of T-Mobile walking away seriously.”
T-Mobile US, Sprint, SoftBank and Deutsche Telekom declined to comment.
T-Mobile/Sprint: battle of marathon
February 11, 2020
T-Mobile can have Sprint now. The question is whether it wants it at the mooted price. On Tuesday, a New York federal court declined to block the merger of the third and fourth-largest mobile phone providers in the US. Several states had fought the $59bn deal on worries of higher consumer prices. Judge Victor Marrero has bought the sob story put forward by the two companies: that each is too meek to compete with titans AT&T and Verizon as 5G networks are rolled out.
The fortunes of T-Mobile and Sprint have diverged for years. The former instituted an aggressive low-price strategy and grabbed massive market share gains in an otherwise mature industry. In contrast, Sprint’s $33bn net debt load had become an albatross around its neck, dragging it towards bankruptcy. Since the deal was announced nearly two years ago, T-Mobile shares are up nearly a third. Sprint stock is down more than a quarter. The exchange ratio fixed in April 2018 gives a third of the company to Sprint shareholders, led by controversial Japanese tech group SoftBank. That appears too generous today.
T-Mobile’s low-price strategy has continued to work in the past two years — its annual ebitda is up nearly a fifth. Sprint’s operating cash flow, in contrast, has remained flat. Based on the market worth of each company before the court ruling on Tuesday, Sprint’s equity value accounted for just a fifth of the total. As the deal will give a third of the combined group to Sprint shareholders, Sprint shares rocketed 73 per cent.
Sprint argues that its ultimate value to T-Mobile comes in its spectrum hoard, which its purchaser can tap for its 5G network. After fighting an expensive regulatory battle for two years, T-Mobile is not likely to walk away now. But it does have the ability to re-cut the exchange ratio. Then again, the hassle may not be worth it. A complex integration lies ahead. Huge cost savings should be possible, suggesting T-Mobile shareholders will do just fine. If the terms remain unaltered, it would be a big — and increasingly rare — win for SoftBank.
realLexusl21 wrote: What happens to TMobile users who have an older grandfathered plan?
Whatever T-Mobile wants to do with them. My guess is unless it's an insanely great grandfathered plan, or an insanely low monthly cost, T-Mobile will initially be more interested in keeping customers than dropping grandfathered plans.