Sprint Acquires Stake in Jay Z’s Tidal Music Service

U.S. operator Sprint has agreed to buy a 33 percent stake in the music streaming service Tidal. As part of the deal, Tidal and its artists will create exclusive content for Sprint customers. No financial details of the deal were disclosed, although Sprint is said to have paid around US $200 million. The rapper Jay Z, his wife Beyoncé and the other artist-owners of Tidal will continue to run Tidal’s service, while Sprint CEO Marcelo Claure will join Tidal’s board of directors. Sprint and Tidal will also create a dedicated marketing fund specifically for artists, which will allow them the flexibility to create and share their work with and for their fans. The partnership follows Tidal’s recent unveiling of Master quality recordings, as it continues to focus on the high end of the streaming market. Tidal is available in more than 52 countries, offering over 42.5 million songs and 140,000 videos. First launched by the Swedish company Aspiro, Tidal was acquired in 2015 by a company backed by Jay Z and relaunched in more markets.

In the ongoing drive for mobile operators to stay relevant and not devolve into being mere providers of a commodity-type service, streaming entertainment content—especially exclusive content—has emerged as a major factor. Sprint’s purchase of a large stake in Tidal instantly makes the U.S. operator, which is majority-owned by Japan-based Softbank, a player in the streaming music game. Tidal is not one of the biggest music providers; Spotify, one of the global leaders, has 43 million subscribers, while Tidal claims 3 million and some reports say only 1 million.

Still, we think the acquisition of the stake is a coup for Sprint. For one thing, the fact that Tidal will create content exclusively for the operator means that Sprint will have a powerful tool with which to retain subscribers and attract new ones. For the operator, Tidal will be a brand enhancer that can sharpen the competitive edge. In addition, while Tidal’s customer base may be small, the company targets a high-end demographic with its relatively high pricing. And the fact that it is artist-controlled not only ensures that its offerings will be high-quality, it also affords another marketing opportunity to Sprint, which will be able to enlist the celebrity artists for promotional campaigns.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.

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SoftBank, Foxconn Mull Joint Venture for Device Manufacturing in India

Japan-based SoftBank (which owns Sprint, among other mobile and fixed network operators) and Taiwan-based Foxconn Technology Group (which manufactures Apple’s iPhone) are in talks to form a joint venture in India to manufacture electronic devices such as smartphones and tablets. The venture would be led by Foxconn and supported by SoftBank, according to remarks made on Monday by SoftBank CEO Masayoshi Son. “We will like to support Make in India programme and vision,” said Son, referring to a campaign for domestic manufacture championed by Prime Minister Narendra Modi. “We are discussing with Foxconn about how we can support Make in India programme jointly where Foxconn will lead and SoftBank will support.” He added, “The details of this is still work in progress. That announcement will be made sometime in near future.”     With India’s mobile telecom sector booming and data use growing exponentially, there is now a vigorous market for smartphones in the country. Affordability, however, has been a stumbling block for many potential users—as well as for manufacturers of high-end phones, such as Apple. The 16 GB version of the iPhone 6 currently costs the equivalent of approximately US $690.00 in India. If the phones were to be made domestically, the cost would most likely go down dramatically. India could also be a place to produce iPhones for export, which would benefit Foxconn in light of the fact that wages in China, now its main manufacturing center, are rising.   SoftBank’s presence in the joint venture is significant because of the Japanese company’s role as a mobile service provider. Return on investment in mobile networks is not possible unless the appropriate devices are available and affordable. Putting more smartphones into the hands of users all over the world, especially in developing economies, is essential to the future growth of the subscriber base for data services, which will continue to be the key to mobile revenues worldwide. It should also be noted that this potential device manufacturing partnership is being discussed against the backdrop of an actual partnership announced on Monday between SoftBank, Foxconn and Bharti Enterprises, which will invest US $20 billion over 10 years for the development in solar power in India. Presumably the energy generated through this project will help power the country’s mobile networks and devices as they grow.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Click here to contact a Tarifica Analyst.

Dish Said to Be in Financing Talks for T-Mobile US

U.S. satellite TV provider Dish Network is in talks with banks about funding a bid for T-Mobile US, according to a report in the Wall Street Journal. Dish is considering borrowing US $10–15 billion for the cash portion of a bid that would primarily be composed of its stock, according to people familiar with the matter. The two sides are discussing a deal that would leave Deutsche Telekom, which controls T-Mobile, with a large minority stake in a combined company. A deal between Dish and T-Mobile is not considered imminent, and it is possible that an agreement will not be reached, according to the sources. It is unclear how much Dish is considering paying for T-Mobile, which has a market value of US $31 billion and is the fourth-largest mobile carrier in the U.S. Dish, the country’s second-largest satellite TV provider, has a market value of US $34 billion.

Deutsche Telekom has been looking to divest itself wholly or partly from T-Mobile US for a while now, without success. In January, Deutsche Telekom CEO Timotheus Hoettges said that T-Mobile has no chance of catching up with market leaders Verizon Wireless and AT&T, and that its “Uncarrier” approach of relying on aggressive promotions is not sustainable in the long term. Deutsche Telekom, which owns two thirds of T-Mobile, has had to inject US $4–5 billion a year into T-Mobile to keep it going, and while the U.S. operator has been constantly increasing its number of subscribers, it has also consistently lost money. While Hoettges expressed a desire for T-Mobile to merge with third-place U.S. operator Sprint (majority-owned by Japan-based Softbank), it is clear to him and to most observers that U.S. regulators, who wish to keep the market at four major MNOs, would never approve such a deal. So reducing Deutsche Telekom’s ownership of T-Mobile by doing a deal with a non-MNO entity such as a satellite provider is a good alternative strategy, and Dish is a good prospective partner. Dish founder and CEO Charlie Ergen has been expressing interest in T-Mobile for almost a year, after having lost out to Softbank for control of Sprint. A merger could be a boon for Dish, which could enter the mobile market and offer multiple-play packages, and for Deutsche Telekom, which could reduce the financial burden induced by T-Mobile US. T-Mobile’s network would benefit from adding the mobile spectrum that Dish has been buying up. However, the two companies are reportedly only the in the discussion phase, and there are many reasons, from the financial to the personal, why it might not take place at all.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. Contact Tarifica for a subscription to the Tarifica Alert. 
Tarifica is the leader in monitoring and analyzing telecom pricing, covering hundreds of operators in every region of the globe. Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognizedauthorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Click here to contact a Tarifica Analyst.

Deutsche Telekom CEO: T-Mobile US Can Be a Standalone Business

Timotheus Hoettges, the CEO of Deutsche Telekom, has said that T-Mobile US Inc., wholly owned by Deutsche Telekom, can continue to exist as an independent operator, now that two attempts by the German telecom company to sell it have come to naught. Last week, France-based Iliad SA, owned by billionaire Xavier Niel, made an offer for T-Mobile of approximately US $18 billion including synergies. That was an improvement on its rejected August offer, but it, too, was rejected by Deutsche Telekom as insufficient in relation to T-Mobile’s valuation, which is now US $22.1 billion. Also in August, U.S. operator Sprint, owned by Japan’s Softbank, abandoned its effort to acquire T-Mobile due to regulatory concerns. In an interview in Hamburg, Hoettges said, “We are looking into the options, but nevertheless we have an independent, self-funding future for our activities in the U.S. It is a great business, it is a great perspective, we could have a lot of potential to realize in the future.” Deutsche Telekom is having to accept that it may not be able to divest itself of its U.S. mobile operator business. That is not necessarily a bad thing, considering that T-Mobile’s aggressive “un-carrier” strategy appears to working; in August it added 2.75 million new customers for its best month ever. While it is likely the case that only by merging with another player could fourth-place T-Mobile pose a genuine challenge to the big two, Verizon and AT&T, T-Mobile is still a vital, growing business that Deutsche Telekom quite rightly perceives as an asset rather than a liability. Still, in order to reach its potential, T-Mobile will need some substantial investment in its network, acquiring new spectrum and improving its current infrastructure, so that its attractive deals can be accompanied by equally attractive quality of service. If Deutsche Telekom is truly in it for the long haul, it will need to spend money to make money. Of course, if satellite TV provider Dish Network Corp. were to make an offer for T-Mobile in the future—which its CEO, Charlie Ergen, has mentioned as a possibility—everything could change.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week :  Story Of The Week

As Sprint Withdraws T-Mobile Buyout Offer, Uncertainty Abounds

After months of speculation and high-level negotiations, Sprint, the third-largest U.S. operator, suddenly withdrew its offer for T-Mobile, the fourth-largest carrier in the country. While Sprint’s parent company, Japan’s SoftBank, had long expressed a desire to acquire T-Mobile in order to augment Sprint’s oft-bemoaned network and give the company the scale to compete with U.S. heavyweights Verizon Wireless and AT&T, regulatory concerns proved too great for the merger. On the topic, Tom Wheeler, chairman of the FCC (the U.S. telecommunications regulator), stated, “Four national wireless providers are good for American consumers. Sprint now has an opportunity to focus their efforts on robust competition.” Apparently the disintegration of the deal was not without some bad blood, with T-Mobile CEO John Legere making several inflammatory tweets afterward, including “Join T-Mobile now and jump off the Sprint bus before it crashes.”

T-Mobile has thrived through a combination of aggressive pricing and advertising and the extensive inclusion of add-ons to their plans, like its current offer of free data for streaming music services. While these tactics have served it well for poaching other carriers’ dissatisfied customers, ultimately for T-Mobile to continue its gains it will have to have a strong national network that can compete with the country’s largest players. Even Legere himself has recently implied that T-Mobile may struggle to continue its expansion without finding a partner: “If you look at the long term of the wireless industry, it is a scale game.”

The market is now left in an ambiguous position. There are other suitors for T-Mobile: Satellite television provider Dish Network has expressed interest, and French discount carrier Iliad (owner of Free Mobile) has made a US $15 billion offer for 56.6 percent of the company. The Iliad offer is particularly interesting, since, when it was made last week, it was largely seen as showmanship and taken lightly. While parent company Deutsche Telekom appears to have rejected Iliad’s offer for T-Mobile (which was a significantly lower valuation than discussed with Sprint), the French carrier may come back with a new offer, particularly since there are currently no other bidders. In announcing its initial offer, Iliad stated that it believed it would save US $10 billion annually through cost cutting and synergies. While we fail to see how these savings will materialize (particularly since Iliad has no U.S. presence), we must admit that there appears to be some commonality in corporate culture and strategy between the two operators. “T-Mobile has successfully established a disruptive position, which in many respects, is similar to the one Iliad has built in France,” stated Iliad founder Xavier Niel. Since arriving in the French market in 2012, Iliad’s Free has snagged a 12 percent market share largely on the promise of cutting household mobile bills in half. It appears that we will soon see if the U.S. market will face this kind of heightened price competition.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx