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Merging of Sprint Nextel and T-Mobile (Essay Sample)

Instructions:
T-Mobile - Sprint Merger? Rumors about potential mergers are often a hot topic in the business press. One rumor being floated around recently is a potential merger between mobile phone giants T-Mobile and Sprint. Mergers between two large companies are always complicated, but some have noted the possible synergies in 4G technologies that might be possible in such a merger. As you know from reading the material in the background materials, mergers can bring about great rewards but also can bring great risks and pitfalls. For this assignment, do some research concerning the arguments both for and against such a merger from a financial perspective. For this module we are not so concerned with how consumers may fair, as this is an issue for the government to consider if they have to approve this merger. Instead you are considering this from the point of view of whether or not such a merger would be a profitable undertaking that would add value to the shareholders of both corporations. There are may different articles on this potential merger, but here is one link to get you started: (I opend it for you below) http://www.americanbankingnews.com/2010/07/15/sprint-nextel-nyse-s-and-t-mobile-merger-rumors-return-after-comments-from-sprint-ceo/ T-Mobile - Sprint Merger? Rumors about potential mergers are often a hot topic in the business press. One rumor being floated around recently is a potential merger between mobile phone giants T-Mobile and Sprint. Mergers between two large companies are always complicated, but some have noted the possible synergies in 4G technologies that might be possible in such a merger. As you know from reading the material in the background materials, mergers can bring about great rewards but also can bring great risks and pitfalls. For this assignment, do some research concerning the arguments both for and against such a merger from a financial perspective. For this module we are not so concerned with how consumers may fair, as this is an issue for the government to consider if they have to approve this merger. Instead you are considering this from the point of view of whether or not such a merger would be a profitable undertaking that would add value to the shareholders of both corporations. There are may different articles on this potential merger, but here is one link to get you started: T-Mobile - Sprint Merger? Rumors about potential mergers are often a hot topic in the business press. One rumor being floated around recently is a potential merger between mobile phone giants T-Mobile and Sprint. Mergers between two large companies are always complicated, but some have noted the possible synergies in 4G technologies that might be possible in such a merger. As you know from reading the material in the background materials, mergers can bring about great rewards but also can bring great risks and pitfalls. For this assignment, do some research concerning the arguments both for and against such a merger from a financial perspective. For this module we are not so concerned with how consumers may fair, as this is an issue for the government to consider if they have to approve this merger. Instead you are considering this from the point of view of whether or not such a merger would be a profitable undertaking that would add value to the shareholders of both corporations. There are may different articles on this potential merger, but here is one link to get you started: Business News: Sprint Nextel (NYSE: S) and T-Mobile Merger Rumors Return After Comments from Sprint CEO July 15th, 2010 - View Comments - Filed Under - by Matt Filed Under: Business News Sprint Nextel (NYSE: S) and T-Mobile may be moving toward a merger as Sprint builds out its 4G network, said the Financial Times suggests in an article published Tuesday. According to the report, Sprint Nextel CEO Dan Hesse told the agency that he sees “logic” in a potential merger between Sprint and T-Mobile USA. He said that if the two companies were using the same 4G technology, that consumers would benefit. Hesse declined to comment further on any merger details and Deutsche Telekom (owner of T-Mobile USA) CEO René Obermannhas said that there wouldn't be any “multibillion” euro deals this year. Sprint Nextel has partnered with Clearwire to build a 4G wireless network using a technology called WiMax, which is now available in 43 markets. Last month, Sprint Nextel launched its first 4G smart-phone, the HTC Evo, but component issues have caused shortages nationwide at many retail locations. When discussing whether or not Sprint would eventually move to LTE 4G technology being used by Verizon, Hesse reaffirmed statements he previously made. “We have the spectrum resources where we could add LTE, if we choose to do that, on top of the WiMax network,” he told the Financial Times. “The beauty of having a lot of spectrum is, we have a lot of flexibility.” Verizon's LTE network is likely to go live in 25 to 30 markets by the end of the year. Most other GSM carriers around the world, including AT&T and T-Mobile, plan to make use of LTE in their next-generation wireless networks. As competition between AT&T and Verizon heats up, there's been speculation that Sprint and T-Mobile USA will join forces. In 2009, rumors surfaced that Deutsche Telecom would consider buying Sprint and merging the two operators, but the two companies make use of different cellular technologies. Sprint uses CDMA and EVDO on its network and T-Mobile makes use of HSPA and GSM on its networks. Merging the two networks would likely be a costly and difficult endeavor But do not limit yourself to this article. Use and other sources in the library. Use various internet search engines such as news.google.com for the latest news on this merger. Look at the webpages for Yahoo and Microsoft. Then write a five page paper answering the following question: Do you think a merger between Sprint and T-Mobile would add value to the shareholders of both corporations? The main focus of this assignment will be answering the question above. In your answer to this primary question, consider the following issues: 1. The impact on T-Mobile shareholders 2. The impact on Sprint shareholders 3. The financial condition of both corporations 4. Why might T-Mobile and Sprint combined as one company be more profitable than they would if they remain independent? 5. Potential pitfalls - might the combined entity actually be less profitable than either company operating independently? Case Assignment Expectations In the grading of your assignment, you will be assessed on the following items: 1. The use of multiple references beyond just the link mentioned above. The link above is just to get you started, but your ability to do your own research beyond these two articles will be assessed. 2. Your paper from beginning to end on the precise assignment question. No need for lengthy background information. Your very first paragraph should include a direct answer to the assignment question, with the body of your paper focused on defending your answer. See the attached Tips for Good Writing for mroe detail on these expectations. Tips for Good Writing When writing a narrative academic paper there is a basic style you need to comply with. Along with the TUI style guide you have in your introductory information, I have certain expectations. There is more to writing than simply formatting the document properly and making your footnotes conform to a specific standard. There is more to writing than simply meeting the MLA guide to style and having decent grammar and spelling. Learning the basics of academic writing will give you the foundation you need to create a successful dissertation or published article. The methods presented below are universal and fundamental. These principles are true for good writing in any form. But the requirements are basic. In time you will outgrow this simple formula. But for now, I want to make sure that we can meet the basic standards for clarity of expression and rigor in argumentation. A good paper has three parts: I. Introduction II. Body III. Conclusion This sounds simple, I know, but it is rarely presented the first time. The old saying "tell me what you are going to say, say it, tell me what you said" is the hallmark of basic writing skills. Now let's take each element in turn. I. Introduction: In the introduction you need to have three elements: the problem, your answer, and how you will prove it. First, tell me what the problem is; what are we talking about? I need to know the surrounding issue. Second, what is your answer to the question? In one sentence, answer the question you were asked. This is the most important part of your paper. Everything else depends on it. You cannot ask yourself too many times, what is my point? Everything in your paper is there for one reason only, that is, to prove that your thesis is correct. Third, tell me how you will prove that your point is correct. In order of importance, tell me what your major reasons are for believing your thesis to be true. At the end of your introduction I should be able to stop, and know what the problem is, what your answer to the problem is, and how you are going to prove it. II. Body In the body of your paper I want you to argue for why your answer to the question is correct. Discuss one point at a time and explain each point thoroughly. Use the material you have researched, facts you have compiled, personal experience, speculation if you must. I want to see you prove your answer to be correct. One point per paragraph! In each paragraph you will have a thesis statement at the outset. What is the point of that paragraph? The point of each paragraph (you may have more than one paragraph per point, although not the other way around) must be clear in how it proves your thesis to be correct. A good paragraph has three elements: the point; the explanation; the conclusion. In each paragraph I want to know what point you are making, you must explain it thoroughly, and say how it proves your thesis to be correct. Detail your explanations and clearly show how they prove that you are right. III. Conclusion A good conclusion is a simple matter. Simply sum up how you proved your thesis to be correct. Follow these basic guidelines and you will produce a good basic paper. Once you have mastered the fundamental style of argument we can work on making you the next Marcel Proust. Be patient! . Your paper should be at least five pages in lengths. 4. Your paper should include proper referencing, both with a bibliography and references within your text. Your references should support your answer to the assignment question. source..
Content:

CASE STUDY: MERGING OF SPRINT NEXTEL AND T-MOBILE
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(19, October, 2010)
Case Study: Merging of Sprint Nextel and T-Mobile
Introduction
There are benefits that result from a merge between two companies among them, economies of scale, improved strength to fight competition and efficiency in business operations (. A report in the Financial Times (2010) reported a possible merger between Sprint Nextel and T-mobile. This paper will address how beneficial the merger will be to the shareholders of the two companies. The paper will also analyze the possible pitfalls of the merger. Sprint and T-mobiles are among the top companies in providing wireless technology services in the U.S. A merger between the two would provide the strength required to fight off competitors, the merger would provide economies of scale in terms of finance resources, technical economies and a combined investments in Research and Development. These benefits will lead to reduced costs, and increased profits which will result to higher returns for the shareholders. The paper will separately analyze the benefits of the merger to the Sprinter Nextel shareholders and for the T-mobiles shareholders, plus their financial position. The paper will then analyze the benefits that are gained for the two companies after the merger.
Impact on T-mobile
Sprint’s brand is stronger than T-Mobiles. Thus the T-mobile shareholders will benefit from this fact the strong brand leverage that is currently with Sprint shareholders. T-mobile will benefit by gaining customers from Sprint. A wider customer base will mean higher revenues and a possible increase in profits. Since T-mobile is the stronger company. The benefits to the shareholders are only likely to be achieved in the long term. There are also tax benefits for the shareholders as T-Mobile is a foreign company (Spencer, 2009)

Impact on Sprint Nextel
The shareholders from Sprint will gain highly from the merger. T-mobile is a more stable company with earnings per share of $0.111 as compared to Sprints -0.84. The shareholders who will sell their rights after the merger are likely to benefit from the increased value of the shares. T-mobile is based in Germany thus the merger will result to the company gaining an international investment portfolio. This will benefit the Sprint Nextel shareholders in that the share value will go up and will not be affected by the current affairs in the U.S. alone. The advantage of companies being international is that they do not depend only on the current situation within the home country. T-mobile is likely to loose from the merger. It could be with this reasoning that Deutsche Telkom CEO said of the merger, “there wouldn’t be any multi-billion euro deals this year” (Matt, 2010).
Financial position for the two companies
According to the annual reports, T-mobile USA had total revenue of $21.5 billion and an operating inco...
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