Sprint and T-Mobile call off merger after months of talks
November 5, 2017 by admin
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SAN FRANCISCO/NEW YORK (Reuters) – Sprint Corp (S.N) and T-Mobile US Inc (TMUS.O) said on Saturday they have called off merger talks to create a stronger U.S. wireless to rival to market leaders, leaving No. 4 provider Sprint to engineer a turnaround on its own.
The announcement marks the latest failed attempt to combine the third- and fourth-largest U.S. wireless carriers, as Sprint parent SoftBank Group Corp (9984.T), and T-Mobile parent, Deutsche Telekom AG (DTEGn.DE), show unwillingness to part with their prized U.S. telecom assets.
The companies’ unusual step of making a joint announcement on the cancelled negotiations could indicate they still recognise the merits of a merger and could keep the door open for potential future talks.
The companies said they ended talks because they “were unable to find mutually agreeable terms.”
A combined company would have had more than 130 million U.S. subscribers, behind Verizon Communications Inc (VZ.N) and ATT Inc (T.N).
John Legere, president and chief executive of T-Mobile, said in the statement that the prospect of combining with Sprint was compelling but “we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared to our outstanding stand-alone performance and track record.”
Sprint CEO Marcelo Claure said that even though the companies could not reach a deal, “we certainly recognise the benefits of scale through a potential combination.”
Claure said Sprint has agreed it is best to move forward on its own with “significant assets, including our rich spectrum holdings, and are accelerating significant investments in our network to ensure our continued growth.”
Failure to clinch an agreement leaves SoftBank CEO Masayoshi Son, a dealmaker who raised close to $100 billion for his Vision Fund to invest in technology companies, with the need to find another option for Sprint.
Sprint is in the middle of a turnaround plan and has sought to strengthen its balance sheet by cutting costs. But industry analysts have expressed concern that the company, weighed down with total debt of $38 billion, has few financial options. Even though its customer base has expanded under CEO Claure, growth has been driven by heavy discounting.
Claure said in August that while Sprint could sustain itself, cost savings from a transaction were significantly better than remaining a standalone entity.
Analysts said an end to talks to T-Mobile would leave debt-laden Sprint without the scale needed to invest in its network and to compete in a saturated market.
Sprint has sought to strengthen its balance sheet by cutting costs. To shore up cash over the past two years, the company has already mortgaged a portion of its airwaves and equipment through sale leaseback deals.
Mark Stodden, telecom analyst at Moody‘s, said “To really take the kind of next step from a business that has been stabilized to a business that has been growing is going to require a new more intense investment phase.”
T-Mobile is a better position than Sprint as a standalone company, analysts have said. German majority owner Deutsche Telekom, which owns roughly 65 percent of the U.S. carrier, was the first major carrier to eliminate two-year contracts, a shift quickly embraced by consumers and copied by competitors. The company has also badgered rivals with its unlimited data plans.
Deutsche Telekom CEO Tim Höttges said in a statement on Saturday that T-Mobile has a “strong basis for growth in the upcoming years.”
MONTHS OF TALKS
Both companies had expressed interest in a tie-up this year, and industry analysts expected T-Mobile to have more leverage in discussions this time around. SoftBank was prepared to give up control to do a deal with T-Mobile, sources familiar with the company’s thinking told Reuters in February. But no deal was announced immediately following the conclusion of a ban on merger talks in April that was associated with a U.S. government auction of wireless airwaves. Both Sprint and T-Mobile said they were open to exploring other options.
An added wrinkle was Sprint’s negotiations with cable companies Comcast Corp (CMCSA.O) and Charter Communications Inc (CHTR.O).
A source told Reuters in July that SoftBank was considering an acquisition offer for Charter in a deal where it would combine the cable company with Sprint.
The two companies came close to announcing a merger in 2014 but called it off at the last minute due to regulatory concerns.
Industry executives have said a combined Sprint-T-Mobile entity would have the scale, network and enhanced portfolio of wireless airwaves and a better chance to develop 5G, the next generation of wireless technology.
Legal experts also said earlier this year that it was difficult to predict whether the current administration would be more receptive of a deal.
Industry executives have expressed optimism about the prospect of consolidation on earnings calls. But President Donald Trump has also made populist comments on antitrust and prioritised job creation as a key platform.
(This story corrects in the first paragraph that Sprint is No. 4 provider, not No. 3.)
Reporting by Liana B. Baker in San Francisco and Anjali Athavaley in New York; additional reporting by Doug Busvine in Frankfurt; Editing by Matthew Lewis and Marguerita Choy
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Trump’s 11-Minute Twitter Outage Raises Broader Security Questions
November 4, 2017 by admin
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President Donald Trump’s Twitter account may have only disappeared for 11 minutes on Thursday — but it is raising questions about broader security implications.
Twitter said a departing employee was responsible for the outage that sent shock waves through social media and fueled speculation about what was really happening to the president’s @realDonaldTrump account.
The account was back up and running Thursday night, but the president didn’t acknowledge the incident until a tweet on Friday morning that confirmed his account had been taken down by a “rogue employee.” That employee has not been named and it’s not clear what kind of access he or she had to the president’s account.
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While the momentary outage led to a moment of frenzy and — for some — jubilation over Trump’s absence on Twitter, there are serious questions being asked about what a bigger hack could do.
Related: Rogue Twitter Employee Shuts Down Trump’s Account
Charlie Beckett, media professor at the London School of Economics, says even though no real damage was done this time, the incident should raise many red flags.
“Imagine what might have happened if someone hacked the president’s account and started sending out even more provocative tweets? His messages can move markets and put armies on alert,” Beckett told NBC News.
One major concern is the growing tension between the United States and North Korea over that nation’s nuclear ambitions: Among other strong-arm rhetoric, Trump tweeted in September that North Korea “won’t be around much longer” — which Pyongyang regarded as a “declaration of war.”
Anthony Glees, security expert and professor at the University of Buckingham, agreed that the breach should be taken seriously.
Related: Trump’s Twitter Habit Is Hurting His Presidency
“What it showed was that the president’s Twitter account could be manipulated by somebody other than the president of the United States,” Glees said. “We live in an instantaneous world and these outages are very dangerous.”
But Ewan Lawson, Senior Research Fellow at the Royal United Services Institute think tank in London, says it’s unlikely that one “rogue” tweet from Trump’s account would actually spark a global crisis.
“Whilst it might cause an immediate reaction, I am reasonably confident that the wheels of diplomacy — globally speaking — still move sufficiently slowly that it would be unlikely to lead to anything major,” Lawson said. “The nature of social media, particularly Twitter, is that there are so many feeds and so many sources that one single tweet, even one from the President of the United States, can always be balanced by other inputs.”
Regardless, Lawson said the president’s use of Twitter as an official platform is a conversation that should have been held in the White House a long time ago.
The weakest link
After the snafu, Twitter announced it’s launching an internal review, but Lawson says addressing a breach involving a former employee could prove difficult for the company.
“The employees are, in some ways, the weakest link,” he said. “And if that individual — an insider threat, if you like — has the access and is motivated to do something, it is very difficult to put any measures in place. The only measure you can put in place is keeping an eye on your employees and understanding where the risks are.”
Beckett says if Twitter wants to be seen as a safe place where the most powerful people in the world can communicate directly with the public, the company needs to step up its game.
“Social media companies have always operated on the basis that mistakes will always happen with a live, open network and can be corrected after the event in a timely and transparent way,” he said. “But this incident shows how that principle is no longer good enough.”
NBC News has reached out to the White House to clarify if any protocols surrounding the president’s use of Twitter have been changed as the result of the incident.