T-Mobile daddy mulls US merger
After T-Orange, T-Sprint
Deutsche Telekom - owner of international wireless carrier T-Mobile - is mulling a multi-billion-dollar bid for Sprint Nextel, the third largest carrier in the US.
According to sources speaking with The Daily Telegraph, the German telecom giant has pulled in Deutsche Bank to explore a possible deal for Sprint, a company with a market value of $10.6bn.
After Deutsche Telekom reported a $1.46bn first quarter loss, chief exec Rene Obermann blamed the sinking fortunes of T-Mobile UK and T-Mobile US, vowing to turn the pair around. Last week, following a $751m Q2 profit, Obermann and co. announced the merger of T-Mobile UK and France Telecom's Orange UK, a move that creates Britain's largest carrier. And now, it would seem, DT is working to shore up its US efforts.
T-Mobile US is the country's fourth largest carrier behind Verizon and AT&T. A Sprint merger would give it a reach on par with AT&T, the sole US carrier for the Apple iPhone. Obermann and crew are already spending $1bn a year to improve the outfit's network, and who knows how much more would be needed to combine it with Sprint's network. T-Mobile uses GSM, Sprint uses CDMA, and Nextel - consumed by Sprint in 2005 - is built with iDEN.
The Telegraph says that T-Mobile has been exploring a Sprint merger for more than year, but that "serious preparations" for the deal began three months back. Press reports of a possible deal first surfaced in May 2008. ®
Other than the awful Sprint Picture Messaging system I'm pretty happy with Sprint. Sprint Picture Messaging sucks donkey. Maybe T-Mobile could fix that for us?
I'm not sure it would be anticompetitive - it's too simplistic to say that it's four national carriers being condensed down to three. Currently, pricing on AT&T and Verizon is higher than in many other countries because, in effect, their competition is too weak. A hypothetical third player with a truly national footprint could give the duopoly a run for their money in the way that Sprint and T-Mobile cannot. Second, yes the only way you could imagine this would work would be not dissimilar to the AT&T mess earlier in this decade - largely "sandboxed" legacy networks dual-mode with LTE. That shouldn't be impossible - such phones will need to be produced for Verizon anyway, making a similar transition, and while the frequencies are non-standard, T-Mobile already gets carriers to make WCDMA phones for it and other manufacturers will supply WCDMA-LTE phones for the rest of the world's carriers. It's messy and expensive but quite obviously possible: how this saves T-Mobile money is the question. Verizon - Sprint seems to make more sense but antitrust would be a nightmare.
As to WiMax (CDMA) - LTE (GSM) competition, I think that's a red herring, not least because LTE and WiMax aren't competing standards in the same way CDMA and GSM are. There's also little evidence that the GSM standard has stifled competition and US carriers have been notably slower to adopt newer GSM-family technologies than other parts of the world, despite the spur of apparent competition between standards. What GSM standardisation has done is lower costs, and barriers to entry. In the PC world, the real competition hasn't been Mac - Windows, but between different PC vendors using in effect the same technology, but mobile telephony is a much more open field even than this - Ericsson, Nokia, Siemens etc.
re: low prices
You mean what would happen to Sprint's low prices. Sprint just started a $69/mo unlimited mobile to mobile(regardless of carrier), unlimited data, Blackberry services, GPS, TV, NFL TV.
Sprint's coverage is similar to T-mobile's. I've had both and am about to head back to Sprint.