A deal for T-Mo isn’t going to happen, so Sprint will have to innovate its way to success

Sprint posted another tough quarter today, reporting a $1.04 billion loss due largely to write-downs on the Nextel network it has shut down. Not only was Sprint the only major U.S. carrier yet to lose money during the period (T-Mobile has yet to post earnings), its low-margin wholesale business accounted for the vast majority of its new customers, as my colleague Kevin Fitchard points out. It probably shouldn’t come as a surprise, then, that Sprint CEO Dan Hesse used the earnings call to claim that further consolidation among operators would be “good for the country” in a not-so-subtle plea to U.S. regulators to approve any deal with T-Mobile.

I predicted a couple of months ago that a tie-up between the two smallest tier-one operators was highly unlikely to get a green light, and the Wall Street Journal reported yesterday that Sprint is reconsidering an acquisition after getting push-back from the Department of Justice and Federal Communications Commission. T-Mobile, of course, has gained tremendous momentum over the last year thanks to disruptive moves like killing handset subsidies and two-year contracts, and giving away a little monthly data to users who buy cellular-enabled tablets. With a takeover of T-Mobile looking less likely than ever, Sprint will have to take a page from its rival’s playbook and innovate its way to success.

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