Deutsche Telekom and T-Mobile USA consider deals with Sprint, Clearwire and Lightsquared

March 9, 2011 - PRLog -- In its attempt to make up ground on bigger players, Deutsche Telekom AG is considering many strategies for its US subsidiary, T-Mobile USA.

Deutsche Telekom is open to all options in the United States according to Timotheus Hoettges, Chief Financial Officer, adding that the operator was not pressed for time, although the company acknowledged earlier that it needs access to more wireless spectrum in coming years for data services.

Talks have been held with wireless broadband providers Clearwire Corp. and Lightsquared regarding teaming up with T-Mobile USA. Both of these contenders have spare spectrum capacity.

According to a report by Bloomberg, T-Mobile, ranked 4th in the market, could even be sold to Sprint Nextel Corp. In return, Deutsche Telekom would retain a share in the new enterprise.

A deal with Sprint Nextel, who are ranked 3rd in the US would produce a much larger third U.S. mobile provider, better able to compete with market leader, Verizon Wireless and No. 2 AT&T.

However, Sprint, who chose not to comment, have good reason to tread carefully, as they have experience of the technical difficulties involved in merging incompatible networks. The 2005 buyout of Nextel led to an acute and lengthy loss of customers, from which the company has only recently recovered.

In the longer term, Sprint and T-Mobile USA are predicted to develop similar technology.

T-Mobile USA has lost ground to more minor players such as Leap Wireless International and MetroPCS Communications Inc, as well as to its major competitors AT&T and Verizon Wireless. The firm has "reached a crossroads where they need to explore strategic options," according to a Kaufman Bros analyst.

A major purchase will not be one of the options considered. CEO of Deutsche Telekom, Rene Obermann, has ruled out the purchase of Sprint Nextel or any other multibillion acquisitions.

That some action is required is not up for question, as T-Mobile, formerly something of a cash-cow for Deutsche Telekom, has recently suffered significant customer defections. Herr Obermann has confirmed that the company was looking at partnerships to mitigate future spectrum needs.

Author: Lynn Shaw, Analyst

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