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T-Mobile daddy mulls US merger

After T-Orange, T-Sprint

The smart choice: opportunity from uncertainty

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. ®

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