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Sprint and T-Mobile: Live Together or Die Alone

By Anders Bylund - Updated Apr 6, 2017 at 12:44PM

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This business combination makes too much sense to stay a dream forever.

Sprint Nextel (NYSE: S) stands alone in the American market with a WiMAX network half-completed. Not only is Sprint the only company to get 4G service off the ground -- in a buddy-buddy partnership with ClearWire (Nasdaq: CLWR) -- but it's also the only company to choose WiMAX technology over the competing LTE standard.

All of that may change in the not-too-distant future. In an interview with the Financial Times, Sprint CEO Dan Hesse hinted at the possibility of joining the LTE crowd, too. The company owns enough radio spectrum licenses to support LTE and WiMAX networks at the same time, according to Hesse. In fact, hardware moguls Huawei, Samsung, and Motorola (NYSE: MOT) are already bidding on supplier contracts for Sprint infrastructure spending that could include LTE.

Making the technology leap would put Sprint right in the mix with the other big boys and ready to make a deal. Combining Sprint's 48 million wireless subscribers with the 34 million customers of Deutsche Telekom subsidiary T-Mobile would create an 82-million colossus. Economies of scale would make this a credible competitor to market leaders Verizon (NYSE: VZ) (93 million subscribers) and AT&T (NYSE: T) (87 million), overthrowing the traditional balance of power in one fell swoop.

T-Mobile and Sprint have explored trading rings before, but their different hardware strategies put a wet blanket on that plan. Now it sounds like Sprint is ready to make a change and try again. None of this would happen quickly, mind you. Give Sprint a chance to start building that fancy new network before you send out the wedding invitations. But it's a match made in a Las Vegas shotgun shack: T-Mobile needs 4G spectrum licenses and Sprint needs enough subscribers to look like a serious contender.

A merger of near-equals would make all their dreams come true. This makes too much sense not to happen in the next couple of years, I say.

What's your take? Discuss in the comments below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Sprint Nextel is a Motley Fool Inside Value selection. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

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Stocks Mentioned

Sprint Corporation Stock Quote
Sprint Corporation
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
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AT&T Inc. Stock Quote
AT&T Inc.
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Motorola Solutions, Inc. Stock Quote
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