Joel Greenberg Discusses Possible Business Strategies for Sprint in Connecticut Financial News
Connecticut Financial News (ctfinancialnews.com) reports on Sprint Corp’s proposed acquisition of rival T-Mobile US, Inc., which failed as a result of regulatory concerns. Sprint ranks a distant third in the wireless telecoms marketplace behind Verizon and AT&T, and a merger with fourth-place T-Mobile would have boosted its ability to compete with those two leaders.
Some have suggested that it is unlikely that regulators would approve a merger between Sprint and either Verizon or AT&T after the collapse of the T-Mobile merger. About this possibility, Kaye Scholer Senior Corporate Partner Joel Greenberg noted that Sprint will likely “have to go it alone. There’s nobody else to merge with.” Instead, Greenberg suggested that Sprint should focus on becoming “the smaller, lower cost competitor in the market,” citing Southwest Airlines Co.’s use of that strategy to successfully carve out a niche for itself in the airline market.
One reported weakness for Sprint is the ability to attract new customers. Many who travel for business tend to choose Verizon or AT&T as their provider due to the reliable national and overseas coverage, and so would be unlikely to opt for Sprint instead, even if Sprint rates were substantially lower. In response to this challenge, Greenberg recommended that the company aim younger, pointing out that “if you’re a high school student who spends your days in the community, where the extra $10 or $20 is important, then Sprint may be attractive.”
Greenberg noted that newly appointed Sprint CEO Marcelo Clure will likely be cutting staff and lowering overhead costs in order to ensure that Sprint is the least expensive wireless option. “They can’t compete head-to-head with Verizon and AT&T, so they have to find niches,” he said.
Greenberg added that it is possible that Sprint may pursue a strategic alliance with DISH Network if “there were additional use of the network beyond classic wireless devices.” However, he noted that because Softbank owns 80% of Sprint, it controls acquisition options. “It’s not as if Sprint can make more money and someone will launch a bid to buy it,” he concluded.