Sunday, May 04, 2008

Match Made in Wireless Heaven? T-Mobile and Sprint

BloggingStocks.com's Douglas McIntyre posted a few reasons today why a Sprint / T-Mobile deal makes sense.

Being the number three and four carriers, it would seem to make sense.

But the fact that issues still exist from the last merger (Sprint / Nextel) that's giving Sprint churn-nightmares each quarter, would imply that this thing isn't happening any time soon - if at all.

And, given T-Mo's tight focus on rolling out UMTS in '08, I can't imagine they'd want to absorb network-related issues that have existed since the Sprint-Nextel merger.

But, hey, if T-Mo and Sprint find a way to make the marriage work, it would put their subscriber list above both ATT and Verizon Wireless. Could they make it work with all the issues they'd certainly inherit? Well, it could be better than being number 4 (T-Mo). And, Sprint certainly needs to do something about this.

But then again, I'm no expert. I suppose you ought to just read McIntyre's column:

There are probably some hurdles to Deutsche Telekom, the German phone giant, buying Sprint, but the deal does make sense for a number of reasons. Reuters writes that Der Spiegel, one of Germany's most prominent publications, reported that "Deutsche Telekom is looking at a possible purchase of...."

DT has a very significant problem in the U.S., and it is one that the company cannot overcome on its own. The firm's U.S. wireless venture, T-Mobile, runs a distant fourth among carriers in the U.S. The two leaders, AT&T and Verizon Wireless seem to have the top spots cemented and are adding new customers every quarter. Sprint is in third place with about 50 million subscribers to over 60 million served by each of the two leaders.

Sprint has deep troubles of its own. It has run into subscriber retention issues since the NexTel merger. The company's financial position is weak. Its share price is under $8. Less than two years ago, it was almost $23. Sprint's plan to build a nationwide 4G network using WiMax is all but dead. The company simply does not have the financing to complete it.

T-Mobile has nearly 28 million subscribers. Combined with Sprint, it would take the lead in U.S. wireless customers with about 78 million. Integrating the wireless platforms of the two companies would be extremely difficult. But, the alternative is being the fourth horse in a three-horse race.

1 comment:

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