Heading into its merger talks with T-MobileSprint (NYSE:S) needed a deal more than its rival. The No. 4 carrier has slowed its bleeding and reduced expenses, but it's still struggling to show growth.

In this segment from Industry Focus: Consumer Goods, the team discusses how the capital requirements of the wireless industry and ongoing challenges at Sprint leave the company in a difficult position going forward.

A full transcript follows the video.

This video was recorded on Nov. 7, 2017.

Dan Kline: Sprint is on better ground, but they haven't spent a lot of money on their network, which is a problem. They will argue that they're within 1% of the other networks, and that's not really what the data shows.

Vincent Shen: In terms of the coverage and the network quality.

Kline: Yeah. And the reality is, they're the No. 4 network, generally, on most of the accepted standards. There's all sorts of different data and different ways you can parse things, but it's pretty widely accepted that Sprint is the worst, and it's going to get worse as they don't spend money, which is part of why they might like to be for sale.

Shen: And as of the most recent quarterly report, Sprint has added postpaid subscribers for nine straight quarters. They did see their highest postpaid additions in company history. So some positive marks, as you mentioned. They also cut a ton of costs year to date. I believe it's yielded savings of $750 million.

Kline: It's price, as well, with postpaid. Boost Mobile tends to be the cheapest. So they might be cannibalizing their own customer base, because you can port your Sprint phone to a Boost Mobile phone with zero effort and pay less.

Shen: The cost-cutting efforts are definitely a focus for management right now. They're improving their profitability, but at this point, that company has still reported negative earnings for several years running. And on the not so bright side, the stock is down about 30% year-to-date, and quite a bit today, last I checked before we came into the studio, because the negotiations for this T-Mobile-Sprint deal are officially over. The press release from both companies came out on Saturday. The stock in general has been seesawing between $3 to $10 per share, essentially, for the past five years.

I feel like the cost-cutting and the slowly improving business, or the gradual turnaround that Claure is working on here, it's one part of the puzzle. As you mentioned earlier, the company needs to generate so much cash -- any company in this industry needs to generate so much cash each year to reinvest in the wireless network, to not only just match your competitors in terms of what service you offer, but then you have, for example, 5G networks on the horizon, people already starting to test the infrastructure for that.

Kline: Buying spectrum.

Shen: And that's just another demand in terms of resources that you have to satisfy.

Kline: If you look at what Sprint is doing, they're cleaning up the asset for a sale, a merger, a partnership, whatever it ends up being. We'll talk about that later. But you're not going to make a deal with something that's bleeding customers, that's losing billions of dollars. So if you can take the loss to pretty much zero, and it was a relatively minor loss in the last quarter, and be putting the subscriber needle in the right direction, you're at least showing, whether it's a partner or a buyer or however it comes down, "Hey, there's a bottom here. We're not going to go to zero." And there was a while where it looked like every Sprint customer was just going to become a T-Mobile customer.

Daniel B. Kline has no position in any of the stocks mentioned. Vincent Shen has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.