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Where Will Sprint Be in 1 Year?

By Daniel B. Kline – Dec 18, 2019 at 2:55AM

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The future has largely been written for the struggling telecom brand.

For Sprint (S), the end is near. That's not a dire prediction; it's a reality due to the company's pending merger with T-Mobile (TMUS 2.22%).

The merger, of course, still faces some regulatory hurdles. Federal regulators, including the Federal Communications Commission (FCC), have signed off, but a group of state attorneys general has sued to stop the two companies from combining.

That lawsuit could scuttle the merger, but it wouldn't really change Sprint's fate. The company needs a deal in order to survive (and even in survival, it will more or less disappear) and without one, it will be sold off for parts.

A scene from a Sprint commercial.

Sprint has had distinctive commercials. Image source: Sprint.

What's next for Sprint

The No. 4 wireless carrier has been limping along for years. Merging with T-Mobile gives it a bit of a lifeline even if surviving likely means the end of the brand.

Should the deal go through, a lot of work remains. Sprint and T-Mobile operate on different technology. Merging those two standards will take years, and the combined company might keep the Sprint name while it sorts out those issues.

Ultimately, though, it makes no sense to operate and market two separate brands. The overall company is keeping the T-Mobile name, and it will be led by incoming T-Mobile CEO Mike Sievert, who takes over for bombastic (and incredibly successful) current CEO John Legere. The outgoing boss made it clear that this transition has been in the works for a while and that the new company will be a new iteration of T-Mobile not some sort of mixed branding.

"In the months ahead, my focus will be on ensuring a smooth leadership transition and continuing to work closely with the Board and Mike to complete the Sprint transaction," said Legere in a press release. "This merger will create the New T-Mobile -- a company that is uniquely positioned to continue disrupting the wireless category -- and beyond. This marks the beginning of a dynamic new chapter for T-Mobile."

He doesn't quite say that the new chapter marks a last chapter for the Sprint brand, but that's the reality. That makes sense because T-Mobile has been a growing, dynamic brand, while Sprint has been struggling.

Should the merger fail -- and that remains a possibility -- Sprint will be out of options. The company has already explored being acquired by a cable company, and no deal was made. After a failed merger, it's likely those talks will begin again, with Sprint having no leverage and being sold off cheaply as a way for a cable company to enter the wireless market.

It's a needed end

T-Mobile has already usurped Sprint as the low-price alternative to market leaders AT&T and Verizon. It has no logical place in the market as a stand-alone company should the merger not happen. That's largely because the company's network has fallen behind its rivals, and its customer base does not provide the revenue to fix that.

A combined T-Mobile/Sprint will be well-positioned to launch a 5G network and compete with AT&T and Verizon on equal footing. That likely means the end of the Sprint brand. Some fans of the company might find that sad, but it's a needed sacrifice so the company's legacy can continue as part of a bigger player that could become the No. 1 wireless carrier.

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

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