T-Mobile and MetroPCS: Another Sprint and Nextel?

Perhaps one of the reasons Sprint Nextel's (NYSE: S  ) board of directors essentially said "nay-nay" to CEO Dan Hesse's secret scheme to acquire MetroPCS (NYSE: PCS  ) last year was their memory of Sprint's inability to make its acquired Nextel network work with its own.

The ill-conceived Sprint/Nextel nuptials took place back in 2005 under Hesse's predecessor, Gary Forsee, at a cost of $36 billion. That deal came in at the bottom of Bloomberg's 2010 list of the 100 largest takeovers in the period 2005 to 2008. By 2010, Sprint Nextel had lost hundreds of thousands of customers and its total valuation, including debt, dropped to $30 billion. All because of serious technological hurdles that were ignored by the suits running the companies.

Listen up
So, when the man who was CFO of Nextel at the time of the Sprint Nextel merger says the same technical problems exist for T-Mobile's acquiring MetroPCS as were there for Sprint and Nextel making their partnership work, it's worth abiding his words.

"I think it is easier said than done," Paul Saleh told Dow Jones Newswires. "The technology is going to be equally challenging. It has a lot of similarity with Sprint Nextel in many ways."

As expected, T-Mobile doesn't agree with that assessment. "The soundbite that this is a Sprint Nextel do-over is absolutely completely wrong," T-Mobile CEO John Legere told DJN.

From best to wurst
And then there's the possible clash of cultures, corporate and geographical. T-Mobile is a private company owned by the German corporation, Deutsche Telekom. MetroPCS is a publicly traded company based in Texas, run by its outspoken chairman and CEO, Roger Lindquist. Lindquist is the man who didn't mince words when he gave FierceWireless editor Sue Marek his opinion of Sprint's first 4G technology, WiMAX: "No one is touching WiMAX, that's as toxic as it gets."

Sometimes a trans-Atlantic relationship can work out, like Verizon's (NYSE: VZ  ) and Vodafone's (NYSE: VOD  ) successful Verizon Wireless joint venture.

And sometimes it doesn't, like the struggles Alcatel Lucent (NYSE: ALU  ) has gone through since the merger that put its two parts together. And let's not forget those two unlikely bedmates, Chrysler and Daimler-Benz. Their creation, DaimlerChrysler, lasted nine years -- nine years too long, probably, if you ask executives from either parent.

But, in the end, what will probably determine the success or failure of T-Mobile MetroPCS will be whether or not the engineers can span the technological chasms.

The irony here is that unlike Nextel's incompatible iDEN network -- which Sprint is finally dropping -- the MetroPCS and Sprint networks are compatible. This has not been lost on the Sprint board this time around, as they are now seriously considering another bid for MetroPCS.

Want something profitable to read up on while waiting to see what happens in the T-Mobil/MetroPCS/Sprint love triangle? Check out The Motley Fool's special free report that names its top stock pick for 2012. Just click here!

Fool contributor Dan Radovsky has no financial interest in the above-mentioned companies. Motley Fool newsletter services have recommended buying shares of Vodafone Group. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2050257, ~/Articles/ArticleHandler.aspx, 5/25/2016 12:55:42 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,850.34 144.29 0.81%
S&P 500 2,090.01 13.95 0.67%
NASD 4,891.13 30.07 0.62%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/25/2016 12:39 PM
S $3.53 Up +0.02 +0.53%
Sprint CAPS Rating: **
TMUS $42.00 Up +0.13 +0.31%
T-Mobile US CAPS Rating: ***
ALU $0.00 Down +0.00 +0.00%
Alcatel-Lucent (AD… CAPS Rating: ****
VZ $49.72 Up +0.14 +0.28%
Verizon Communicat… CAPS Rating: ****