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Policy Media/Telecom

Sprint Letter to FCC: ‘We Are Actually Bad’

Sprint filed a letter with the Federal Communications Commission this week that stops just short of saying it would go out of business if its proposed merger with T-Mobile is blocked. The letter details the many threats to Sprint’s future, including the quality of its network, its poor standing with customers and its $40 billion of debt.

“Simply put, Sprint is not on a sustainable competitive path,” Sprint’s outside lawyer said in the April 15 filing first reported by the Wall Street Journal. The company is losing customers, can’t afford to invest in improving its network and is struggling with debt, according to the letter.

The 47-page letter signals a shift in strategy after the Department of Justice, which is also reviewing the deal, told the companies that it wouldn’t approve the $26.5 billion merger as currently structured. Rather than emphasizing how the merger would accelerate the buildout of 5G, create thousands of jobs and increase competition with Verizon and AT&T, Sprint is now highlighting its poor prospects if the merger is blocked.

“Sprint is unlikely to play a meaningful competitive role as a standalone company in the years to come, and any assessment of the impact its proposed merger will have on competition or the public interest should account for its diminished ability to be an effective competitor absent the transaction,” Sprint’s filing states. The letter notes that the company’s board was informed as recently as last month that Sprint’s metrics were well below plan and trending downward. The letter also quotes one unnamed executive saying: “I don’t agree we are really good. We are actually bad.”

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