THE GLORY DAYS
Remember Sprint? 10-15 years ago, Sprint was one of the big 3 telecom companies along with AT&T and Verizon. They had tens of millions of subscribers and were pulling in tens of billions of dollars. But by the end of the decade, the picture looked a lot different. Not only was Sprint bleeding subscribers and revenue but they were being shown up by a new player: T Mobile.
T Mobile had risen from the ashes of near bankruptcy and was making a name for themselves as the “uncarrier”. Everything that you hated about cell phone plans and carriers, T Mobile eliminated. No more contracts, no more hidden fees, and no more sleazy salesmen. And this pitch worked. It worked really well actually.
Within just a few years, T Mobile would grow from being a distant player behind Sprint to trying to acquire the entirety of Sprint. This was definitely a punch to the gut for Sprint and likely a deal that they did not want to accept. But looking inwards at the fundamentals of Sprint, it was obvious that T Mobile was making a generous offer, and turning it down would be a disservice to shareholders.
So, in 2018, Sprint would agree to a $26.5 billion deal with T Mobile. It took a few years to actually finalize the deal and get in through regulators but eventually on April 1, 2020, T Mobile would complete their acquisition of Sprint.
At first, there was some hope that maybe T Mobile would keep around the Sprint branding and just operate as a subsidiary like they did with Boost Mobile. But, T Mobile immediately moved to wipe away all remnants of Sprint. And just a few months after the acquisition on August 2, 2020, the Sprint brand would be officially discontinued.
With the help of Sprint, T Mobile has become the largest telecom company in the US, and revenue has exploded to a new tier, so things are going better than ever. But, the same cannot be said about Sprint. If you try accessing Sprint.com, you’re met with this sad landing page that just redirects you to the T Mobile website.
But, how did this happen? How did Sprint go from being one of the big 3 telecom companies to being completely erased from the face of the planet within a matter of 10 years? Well, join me, as we take a look back at the rise and fall of the forgotten giant: Sprint.
THE UNDERDOG
Sprint was obviously left behind largely because of its unwillingness to change with the times. Their story is particularly interesting because, unlike their peers, they didn’t come from a monopolistic background. If you didn’t know, AT&T and Verizon both evolved from the original AT&T which at their peak controlled 90% of the US telephone business.
Similarly, T Mobile has very much benefitted from the backing of Deutsche Telecom, Germany’s national telecom carrier. Sprint, however, has always been the underdog as the story of Sprint dates back to 1899 to the rural town of Abilene, Kansas to a man named Cleyson Leroy Brown. Cleyson was the son of Jacob Brown, a local grist mill owner.
Usually, this would’ve led to a pretty nice upbringing but unfortunately for Cleyson, his father’s mill turned out to be his worst nightmare as he lost his arm to a mill accident when he was just 10 years old. Cleyson didn’t let this accident wear him down though. He would go on to be a teacher and a manager at a creamery before opening a local electric company that generated electricity using the Smoky Hill River.
It was around this time that telephones first started to make their appearance across the nation, and when it came to telephones, there was only one option: the Bell telephone company or AT&T. The local people of Abeline weren’t exactly a fan of this as they much preferred supporting a local businessman as opposed to the national giant.
So, at their request, Cleyson established the Brown Telephone Company in 1899, and this brings us to the first key strategy of Sprint, customer loyalty and connection. The reason that the Brown Telephone Company was successful was not because they had insane resources or some sort of groundbreaking technology.
No, the reason that the Brown Telephone Company was successful was because they had a personal connection with their customers, and their customers were rooting for their victory. It was this same strategy that T Mobile capitalized on over 100 years later with their whole “uncarrier” movement.
Customers were rooting for T Mobile to redefine the carrier landscape and clean the space. The same, however, cannot be said about the modern Sprint. Most customers didn’t have a particularly positive or negative view of Sprint but they were only using Sprint for one main reason: because it made financial sense. Sprint gave them a good deal or a strong discount which got them in the door. When that initial promo ended though, people would simply leave.
In other words, Sprint had very little customer loyalty and this really hurt them. All of the new customers that they were getting were money losers, and right when they tried to convert them into profitable customers, they would just leave. Aka, each new customer was a net negative for the company.
The best way to overcome this pitfall is to give customers a reason to stick around that’s not just purely financial or logical similar to what T Mobile or the Brown Telephone Company did. Without this X factor though, Sprint simply became the place where savvy customers farmed deals which eventually made the company unviable.
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BOTCHED DEAL
Fortunately, things were looking much better for Cleyson Brown back in the day. Cleyson never had aspirations of growing some sort of national giant. In fact, he much preferred to run a variety of different local businesses. After founding the Brown Telephone Company, Cleyson opened up shoe stores, grocery stores, a gravel and sand company, hotels, a news service, a broadcast station, insurance companies, and oil companies.
As you can see, Cleyson was much more of a multi-faceted businessman as opposed to being a magnate in any one sector. But, this didn’t mean that he squandered growth opportunities that did come his way. In fact, he was very much known for his consolidation and expansion skills.
In 1911 for example, he merged the Brown Telephone Company with three other local telephone companies to create the United Telephone Company. In 1925, he would further consolidate to create the United Telephone and Electric Company. Sprint very much kept up this tradition of strong mergers and acquisitions well past Cleyson’s days and this brings us to their second key strategy: strategic deals.
This is precisely how Sprint grew from being a regional phone business to being a national giant: consistently making better and better deals. For example, in 1986, Brown’s company would make a groundbreaking deal with Southern Pacific Communications or SPC. They would agree to merge with SPC and create a new joint venture called Sprint which stands for Southern Pacific Railroad Internal Networking Telephony.
Similarly, in 1993, Sprint merged with a cellular business called Cental which gave them access to the wireless market. In 1996, they would strike a deal with Radioshack to open up Sprint stores inside Radioshacks. Those were just a few of Sprint’s most notable deals. They’ve completed dozens of such deals and that’s how they really grew their national presence, but not all of their deals had such a happy ending which brings us to their deal with Nextel Communications.
In 2004, Sprint announced that it would be merging with Nextel Communications. At the time, Sprint was the 3rd largest player and Nextel was the 5th largest player within the mobile phone industry. So, on paper, it seemed that this merger would make this duo unstoppable, but see, there’s more to a merger than just size.
For a merger to be successful, both parties need to have significant synergies that can benefit from each other. For example, maybe Sprint had a strong network in the east and Nextel had a strong network in the west. Together, they could have a strong nationwide network, but that’s not how things quite played out.
You see, not only did Sprint and Nextel not have many synergies but they actually had a bunch of opposing technologies that could not be combined. As such, if the new company wanted to streamline and consolidate their networks, they often had to choose between the two companies' holdings rendering the merger completely useless.
To make things worse, their integration efforts often led to outages and cell phone plans simply not working altogether. So, not only did the merger not allow them to reach new heights but it made them look bad in front of their existing customers. Sprint would eventually write off almost the entirety of Nextel in 2008 as a $29.5 billion loss and they would shut down the company altogether in 2013.
Having wasted a full decade and tens of billions on this deal, Sprint had fallen far behind AT&T and Verizon when it came to network coverage and reliability, and this led us to their eventual demise.
EGO KILLS
By the time that Sprint shut down Nextel, things were looking pretty bleak. They had a subpar network with bruised morale, unloyal customers, and an empty balance sheet. But, honestly, you could argue that T Mobile was in an even worse position.
In fact, T-Mobile wasn’t even allowed to sell iPhones till 2013, yet they were able to do this over the next 10 years, so Sprint was by no means a lost cause. They definitely still had a chance to recover but staging such a recovery requires one key characteristic: humility. This was one of the strong suits of Cleyson.
He didn’t live a particularly long life having passed away at age 63, but despite that, he spent the latter half of his life giving back to the community that had given him everything. In 1926, he built a Memorial Foundation in memory of his parents. He would also go on to build a 200-acre park for free which included an amusement park, a lake, a zoo, a golf course, tennis courts, and more.
Of course, this has no direct link to business but at the same time, it does. Humility is extremely important when it comes to running a business. It turns out that customers are surprisingly understanding when you’re honest about a shortcoming instead of trying to hide it or deceive them about it.
Again, this is precisely what T Mobile leveraged. They admitted that they sucked. They didn’t have the best service, that was simply a fact. But, they were working on fixing this, and while they couldn’t promise you the best service right now, what they could promise you was an honest transparent relationship, something that you couldn’t get from the big players.
It would’ve been in Sprint’s best interest to leverage a similar strategy but their ego rendered this virtually impossible. Sprint approached the situation with the ego of a national giant. As far as they were concerned, they were still the big dog and they were just facing a temporary downfall.
As such, they thought they could just pretend that they weren’t inferior to AT&T and Verizon and just incentivize themselves out of this situation. You know, by offering strong discounts and deals, but as we discussed, this just led to net negative customers who were only there for the incentive which is not really surprising.
After all, we’re talking about a carrier that came with all of the same shortfalls as AT&T and Verizon. You know, the 2-year contracts, the hidden fees, and the sleazy salespeople. But, the network wasn’t even good either meaning that the only reason to stick around was for financial incentives. So, trying to buy customers wasn’t exactly a great long-term strategy.
To make things worse, given that Sprint never really admitted that they had a problem, they never addressed their shortcomings. For example, they decided against building traditional cell towers for some reason. Similarly, they were relatively late to 5G, something that T Mobile was early too.
And when you combine this lack of customer loyalty with a botched deal that’s weighing down the company and a general unwillingness to admit shortcomings and overcome them, Sprint’s fate was sealed long before T Mobile actually took over and put them down for good.
