As Sprint’s cost cutting rolls along, a T-Mobile merger is ‘not in the cards’

Sprint’s hunt for $2.5 billion in cost savings is rolling along, with managers checking on 1,739 cost-cutting initiatives each day, the company’s chief financial officer told investors Thursday.

Work also continues on improving the wireless network, improving productivity within Sprint and generally handling the “blocking and tackling” of daily business, Tarek Robbiati said.

“We’re fixing the company, and it needs fixing,” Robbiati said at the Citi 2016 Internet, Media and Telecommunications Conference in Las Vegas.

He acknowledged the efforts include cutting jobs, but he offered no details on layoffs.

“We are undergoing a significant amount of cost cuts and headcount reductions,” he said. “It’s going deep across the company. It’s not a particularly pleasant thing to do.”

Robbiati also deferred when asked about customer gains in the final months of last year. He puzzled over comments T-Mobile officials made at the conference Wednesday, saying they believed Overland Park-based Sprint had done well, without knowing Sprint’s numbers.

Sprint’s half-off rate plan is doing well, which is why it was extended into February, Robbiati said. He also said such efforts to add customers remain the focus of marketing, rather than focusing on keeping customers. Sprint’s improving network means customer defections are at their lowest level ever.

Sprint’s finances are sound, he said, adding that there is no reason to panic.

Nevertheless, the company’s overall condition means there is no avenue toward a merger, Robbiati said, noting that he is frequently asked about the topic given that this is a presidential election year.

Political change in Washington could change the chances that a merger with T-Mobile would gain approval. Sprint’s parent company, Tokyo-based SoftBank Group Inc., had abandoned plans to seek a T-Mobile merger in 2014 after federal telecommunications regulators made clear it would not be greeted warmly in Washington.

Analyst Paul de Sa of Bernstein Research cited the idea of a T-Mobile merger in a note to clients Wednesday. Such speculation, he said, would be “an overhang throughout most of the year.”

The presidential election matters, de Sa wrote, because “a merger is more likely to be approved in a Republican administration,” though it still may be “worth a try” under a new Democratic government.

Robbiati’s thought about merger talk: “Honestly, I think this is misplaced.”

He did not cite regulators as the problem. Instead, Robbiati tied potential merger activity broadly to Sprint’s current cost-cutting efforts.

“Right now it’s not in the cards and will not be in the cards until we have driven to the right level of operating performance,” he said.

This story was originally published January 7, 2016 at 6:21 PM with the headline "As Sprint’s cost cutting rolls along, a T-Mobile merger is ‘not in the cards’."