“I want to acknowledge the Sprint history and its 120-year legacy that is now part of our legacy as we launch into this new era,” said T-Mobile CEO Mike Sievert in a statement, adding, “We did it! Another historic day for new T-Mobile!”
Sprint was born out of the thousands of miles of telegraph wire that ran along the Southern Pacific Railroad’s tracks to facilitate train dispatches. The name “Sprint” was an acronym for the system: Southern Pacific Railroad Internal Networking Telecommunications. In the 1970s, the group opened up access to the long-distance calling network for private customers.
The failed merger left Sprint’s balance sheet depleted, so it didn’t have the same kind of cash to invest in improvements to its network as competitors.
Still, a below-average network used to be enough to draw in customers because Sprint was willing to charge below-average prices. As time went on, though, that became less appealing. These days, people need their phones for everything from banking to paying for the subway, so low prices matter less than having a network that works everywhere, all the time.
“Sprint used the comical tagline: We’re almost as good for less money,” Moffett said. “And almost as good is, for obvious reasons, not a terribly compelling value proposition.”
Moffett says the company lost money on many of the customers it drew in with steep promotions — they would choose Sprint over competitors when it offered them discounted service, but when it raised their rates to a price that was sustainable for the business, they would switch carriers.
Sprint posted net losses in the hundreds of millions of dollars last year. It also lost tens of thousands of postpaid subscribers, who are the customers most likely to pay their monthly bills and least likely to switch carriers.
The new T-Mobile
But combining Sprint and T-Mobile won’t be easy. They use different network bands and technologies — something T-Mobile is familiar with, after it merged with MetroPCS in 2012. That could take some time to integrate.
Although Sprint is dead, T-Mobile is in a celebratory mood.
“This is so much more than just rebranding thousands of Sprint locations with a fresh coat of magenta paint,” Sievert said. “This is about giving customers even more access to our expanded retail footprint … and reap the benefits from all that new T-Mobile has to offer!”