Deutsche Telekom in talks to sell T-Mobile USA to Sprint and keep a stake in the resulting carrier
The talks are ongoing, and nothing is certain at this point, but Sprint Nextel's shares are up 7% today on the rumor. The major bickering is going on around T-Mobile USA's exact valuation. Big Magenta lost 56 000 customers last year, while all other carriers gained subscribers. The other issue is that Deutsche Telekom wants to have a 50% stake in the resulting carrier - Sprint and T-Mobile have a combined revenue of $54 billion for 2010.
The parent company of T-Mo is also exploring buying a huge chunk of wireless spectrum from Clearwire, which Sprint is using to provide its 4G WiMAX service, if the merger with Sprint doesn't pan out. Sprint, in its turn, is looking to buy 4G spectrum from LightSquared, which is a huge wholesale 4G LTE provider.
We will see how this all will end up, but if the acquisition of T-Mobile by Sprint goes through, the resulting carrier will have around 83 million subscribers, still less than those of AT&T or Verizon, plus their 3G and 4G technologies are rather different.
1. bbonline (Posts: 38; Member since: 24 Feb 2011)
WOW if this happened! The wireless landscape in America will be changed A LOT. Talk about 3 telecommunication POWERHOUSES in the USA. I think it's better for struggling T-Mobile and even Sprint. I'd say: Go for it. We need some major competition to the BIG 2.
2. bbonline (Posts: 38; Member since: 24 Feb 2011)
This will be a good opportunity to disassociate from their current names (especially Sprint). I think that carrier has the current reputation due to its name only. S-Mobile?
3. cornerofthemoon (Posts: 505; Member since: 20 Apr 2010)
I'm sure the merger would go just as well as Sprint Nextel.
4. Maestro716 (Posts: 10; Member since: 08 Mar 2011)
I'm sorry, but your sarcasm was lost due to the fact that you're an ill-informed moron
7. cornerofthemoon (Posts: 505; Member since: 20 Apr 2010)
My apologies Maestro God of all Knowledge (bowing gesture)
25. remixfa (Posts: 13902; Member since: 19 Dec 2008)
actually, id say the morons are the ones that think this is a good idea. i too, think it will be like sprint/nextel.
Sprint on CDMA and WiMaxx
Tmobile on GSM and HSPA+
neither tech is compatable with the other. SO one network will have to be torn down/sold off and the other one rebuffed like crazy for the onslaught of new customers. Expect tons of network issues.
Then theres the devices issue. Everyone on the network that got torn down needs a new device, and since the network is forcing the upgrade, it better damn well be free for just about any phone. Now the network has to pay for 30 million new phones for free.
Then there is the plan compatibility issue, billing issues, account issues in general, business account issues, ect ect ect ect
Oh yea, then there is this last issue. Sprint is a HIGH DEBT company that just got its credit lowered. It cant AFFORD to buy T-mobile anyways. Even if it could, neither company has a lot of spare money so who the hell is going to pay for all the aforementioned crap??
This has about as much of a chance as apple installing android on the iphone5.
30. Droid_X_Doug (Posts: 5583; Member since: 22 Dec 2010)
I see a lot of the negatives that you already mentioned. However... if Sprint can get the valuation of T-Mo down low enough, and D-T is serious about wanting to own 50% of the resulting company, D-T will have to pony up some cash.... Guess what Sprint needs most right about now?
31. Maestro716 (Posts: 10; Member since: 08 Mar 2011)
Unless you're a data analyst or accountant for one of these companies, then I think it's safe to say that you really have no idea who can and cant afford to acquire another entity.
36. remixfa (Posts: 13902; Member since: 19 Dec 2008)
well maestro, if you pay attention to the news, you would see thats where ive gotten my info. And yea, I do work for one of those companys. Ive worked for multiple cell companys. There isnt anything i mentioned that isnt true, if you like it or not.
The ONLY way the deal would make sence is if they put themselves on a mirrored LTE path and stayed as 2 seperate operating entities until they could launch all LTE phones. At that point, it would be smarter to sell off/convert sprint's CDMA towers and make them all GSM as Tmobile's HSPA+ is infinately faster than CDMA 3g.
Also, i would get rid of both company names and start with something fresh. Maybe Purple Runner (get it.. magenta + sprint..lol)
41. Anon MBA (unregistered)
Maestro716: You really are the ill-informed moron based on your posts.
The potential deal can be structured as a merger by issuing new shares of stock under consolidation accounting (since pooling of interest is no longer accepted under US GAAP) and no new debt would have to be issued.
This topic is typically covered under Investment Banking or Corporate Finance in any top ranked graduate business program -- meaning you don't have to be a data analyst or an accountant. You just have to understand valuation at the corporate level or have worked as a "securities" analyst.
43. Maestro716 (Posts: 10; Member since: 08 Mar 2011)
haha you guys crack me up. Publications are NEVER a true insight when it comes to a companies worth or potential growth pattern. In other words published numbers are often farce.
So, sorry to inform you guys but I highly doubt anyone on the site is informed enough about these companies wealth to make a rash statement and assume their ability to successfully acquire another company.
40. iFone (unregistered)
Hey, Having an iPhone 5 that dual boots iOS and Android would be the best decision Apple would ever make.
42. Anon MBA (unregistered)
Sprint can issue stock (meaning stock is the acquisition currency) in exchange for T-mobile's assets such that DT ends up owning 50% of the combined entity. In such a situation, the credit rating of the combined Sprint-T Mobile will be upgraded due to the following factors:
-- Greater cash flow to support Sprint's existing debt load (assuming DT retains some of the debt of T-Mobile)
-- Greater diversification of cash flow since the customer mix well be better balanced such as consumer/business, based on geography, etc.
-- Reduced competition since the combined entity will have to spend less on advertising than before
-- there's so many other reasons that would demonstrate that the credit protection measures have STRENGTHEN due to the combined entity
The key here is spectrum since access to the sprecturm generates value. Over time, the technologies will be worked out.
Despite what people think or believe, the fact remains spectrum is limited and thus has value in a world of 4G and cloud computing. If people understand the concept of "distruptive technology" -- have unlimited data at 4G speed would reduce the need to have 32G or 64G flash memory and thus reduce the price of smart phones.
51. ssjassassin (Posts: 108; Member since: 31 Aug 2009)
Chances are they would sell off any spectrum that could not be used for whatever network is stronger. This would free up some debt and allow them to also consider the purchase of a 4g wholesaler. This would go down with growing pains though the outcome for T-Mobile and Sprint customers could be great if it where handled well. I would expect that GSM will win through over the CDMA because of its scalability compared to CDMA. I would think that many of these regional carriers will find the assets they sell off as a valuable investment too so don't think buyers are not out there.
5. Waooooooooooooo PR (unregistered)
niceeeeeeeeeeeeeeeeeeeeeeeee now sprint will goooooooooPink eso eeeeeeeeeeeeeeeeeeeeeeeeeeeeeee
6. Waooooooooooooo PR (unregistered)
but i wil say the correct name for the new company should be Sprint Mobile niceeeeeee nice and it will be the sport power house can you imagen for one secound the NBA and the NASCAR on the new Sprint mobile nice genteeeee esooooo eeeeeeeeeeeee!!!!
8. Box (unregistered)
This makes no sense. Why would they want to sell to a company that is losing money, who made a poor choice for their 4G LTE partner, killed the one thing they had going good for them (Nextel), and have a completely different technology type? If anyone should be buying T-Mobile (and hopefully they won't have to), it should be AT&T
19. pedrocruzmail (Posts: 1; Member since: 08 Mar 2011)
Sprint oready did that been there done that they did that when they merger wiht Nextel few years back think about that it only make sences they posision then self in the race to the 1 places ad the 3D tech the money and you will get the Sprint Mobile niceeeeeeeeee
23. Slammer (Posts: 974; Member since: 03 Jun 2010)
This makes more sense than you think. Sprint chose WiMAX because it was a ready technology. They had to meet a government time frame to utilize spectrum holdings. LTE simply was not available. Just concept in talks for the US.
LTE and WiMAX a very similar in base functions and operability. Far closer than GSM vs CDMA. Sprint has already gone on record for saying an LTE direction is not out of the question. To switch, would be very easy. TMO has stressed LTE. In order for both companies to increase in sales, market share and subscriber base, a union is far more realistic than not.
There are many that don't want to see a unification of these two companies. However, if an individual is in favor of consumer advocacy, this partnership is indeed far more sensible than meets the eye. ATT buying up TMO won't happen. It would seriously breach the competitive market and place a monopoly in ATT's favor.
People need to quell the Nextel/Sprint merge from their heads and dissolve any negativity of Sprint. They are now #1 in customer satisfaction. Thier aggressive tenure on moving forward, is very commendable. Lately, their decisions have been superb. To combine TMO and Sprint, would definitely shake up the industry for the better.
46. William13 (Posts: 20; Member since: 10 Mar 2011)
First of all, this is all merely speculation. Second, Sprint's Network Vision will allow the consolidation of numerous networks at a very low rate. If everyone claiming to follow news reports really did, they would have considered that fact. Network Vision will save Sprint over $1B in operating costs per year just by consolidating iDEN and CDMA. WiMax will also be factored in, and if T-Mobile is acquired, it will go much smoother than the Sprint Nextel merger because of this. Sprint's own executive board has made numerous comments have even mentioned the simplicity in which Network Vision will allow GSM to be consolidated into Sprint's current networks. This is also why they are seriously considering converting to LTE in the next couple years. I love all the business analysts (both sides saying it's impossible AND inevitable) in a forum for nerdy phone fanboys (myself not excluded). Also, the Sprint Nextel merger happened under Gary Forsee, who was known for his bonehead business decisions. Dan Hesse isn't one to look at a move seriously unless it's been researched thoroughly. Regardless, IF it does happen, it won't be for 2-3 years according to analysts at Goldman Sachs, so it's a non-issue for now.
26. AndroidTroll (Posts: 359; Member since: 05 Mar 2011)
I agree that Sprint fucked over Nextel but who cares PTT sucks (unless you work in emergency services and rely on iDEN on a daily basis). Will be interesting to see what Sprint has in store for its new PTT that it will be releasing later this year. Lets just hope that its better than Qchat lololololol!!!
37. shrumph (unregistered)
How did Sprint fuck over Nextel exactly? That network was DOA.
9. cornerofthemoon (Posts: 505; Member since: 20 Apr 2010)
I'm curious what sort of color Magenta and Yellow would make if mixed together. There must be an app for that.
14. bbonline (Posts: 38; Member since: 24 Feb 2011)
It would be orange. I like the name Orange for a carrier. There is a carrier in Europe with that name. Orange Wireless? Sounds good to me...
17. cornerofthemoon (Posts: 505; Member since: 20 Apr 2010)
I actually blended it in Photoshop...It looks like Pink Grapefruit.
10. cornerofthemoon (Posts: 505; Member since: 20 Apr 2010)
Perhaps they'll brag about the acquisition of T-Mobile and all of it's network goodies and then spend the next few years trying to find a way to shut it down.
11. calamazoo (unregistered)
so what's gonna happen with the t-mobile chick? she hot!
16. cornerofthemoon (Posts: 505; Member since: 20 Apr 2010)
Perhaps Sprint will pair her together with James Franco.
12. snowgator (Posts: 3197; Member since: 19 Jan 2011)
GSM or CDMA? Would it actually benefit Sprint in any market it is not already in? Would it make the LTE easier? Would David Blane be invited back for the merger presentation? What color would magenta and yellow make? Come to think of it, what is magenta?
Interesting news, but rumors this early don't mean much. Can't say it ain't a neat thought, but how do this two actually compliment each other?
13. snowgator (Posts: 3197; Member since: 19 Jan 2011)
cornerofthemoon gets all credit for color scheme debates.....
15. bluechrism (unregistered)
US needs more competition, not less - plans from the big 4 are overpriced relative to European equivalents (just look up European carriers hompages to find out) and I don't know how it's going to work for the users of eaither network as the tech is so different between GSM and CDMA. Do you really want AT&T to be the only company to offer world phones (most of the world using GSM?) as well. I'd love Vodafone or someone to add to the GSM world in the US instead.
T-Mobile and sprint suffered reputation issues, but both have cheaper plans than Verizon and At&T and good coverage in cities. T-Mobile was screwed when they bought their 3G bandwidth of the government and had to wait 4 years for the government to stop using it, but now seem to be cracking on and I have always had good customer service from them.
18. BaiGanyo (Posts: 308; Member since: 07 Feb 2011)
DT doesn't want to invest any money in Tmo but wants to own a big stake of Sprint. Hmmm. They are uber controlling and are simply trying to get something for nothing by trying to make a power play for Sprint. I don't think it will work out for them.
20. cornerofthemoon (Posts: 505; Member since: 20 Apr 2010)
The Wall Street Journal thinks it won't happen for a long time, if it happens at all.
28. snowgator (Posts: 3197; Member since: 19 Jan 2011)
W.S.J. is very reliable in this particular field. (mergers)
21. skymitch89 (Posts: 1036; Member since: 05 Nov 2010)
I could see T-Mobile buying spectrum from Clearwire, maybe for more HSPA+ roll out or even eventual LTE, but not Sprint buying T-mobile. For one, neither company can really afford to buy the other; and two, T-Mobile is GSM based and Sprint is CDMA based.
22. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
I'm just gonna copy and paste a comment I put on another website that announced this a lil before this one. "I know its purely speculation and I know T-mobile isn't as bad as Nextel's quality but I would think Sprint has learned from that merge to focus on their own infrastructure then to buy into someone elses."
24. DOGIEFRESH (Posts: 302; Member since: 15 Jul 2009)
Seems like Sprint didn't learn its lesson from Nextel fail, they're two completly different networks and the integration between those will take a lot, not to mention the money Sprint go to spend in the process, money that they don't have.....!!!
27. cornerofthemoon (Posts: 505; Member since: 20 Apr 2010)
The only way it would work is if Deutsche Telecom plays sugar daddy and they consolidate all of the networks into one brand. Perhaps Sprint could offer LTE, GSM, CDMA and iDen devices or they could come up with a completely new name.....sounds tres expensive and impractical though.
29. MATOZ (unregistered)
I prefer to in the eventuality of a fusion between Sprint and Tmobile, the technology used MUST be GSM (HSPA, HSPA+ bla bla) instead of CDMA (for me to old tech).
But, I have Tmobile account and don't want to switch to Sprint... CDMA technology.
Who knows!! what happen next.
Some interesting commercial names!:
32. luis_lopez_351 (Posts: 951; Member since: 18 Nov 2010)
whats up with all these thumbs down D; :) im responsible for it xD
33. Boti95 (Posts: 162; Member since: 05 Sep 2010)
This would be good thing. Now Sprints pre-paid carriers (if Sprint buys T-Mobile) would have GSM technology too! Think about it! Virgin Mobile woud have 4G and GSM phones which you could swap SIM cards and the same with Boost Mobile. T-Mobile's prepaid carrier would have more phone options and CDMA technology too!
34. oddmanout (Posts: 435; Member since: 22 May 2009)
Funny how just last week I read an article on tmonews putting all the rumors to rest about sprint acquiring t-mobile. From what I've read, DT isn't looking to sell T-Mo at all and will remain an independent company.
35. tmorep (unregistered)
THIS WILL NOT HAPPENED SPRINT DES NOT HAVE ENOUGH CASH OR MONEY TO THIS THIS.
44. snowgator (Posts: 3197; Member since: 19 Jan 2011)
According to Bloomberg (March 9th has an update on this story) it is not entirely a cash money purchase. Deutsche Telekom would keep a major holding in the ENTIRE new company. The same article states that this deal would be a 40 cents on the dollar loss on D.T.'s original investment. Last year alone, T-Mobile dropped 8% in value. Again, all according to Bloomberg.
38. kg4icg (Posts: 67; Member since: 18 May 2008)
I don't know why Bloomberg keeps popping up this rumor every year. Maybe to get stocks pumped up. SSDY.
45. yungghost (unregistered)
Pretty interesting comments on the merger of sprint and t mobile but unfortunately i am against it I would rather a company like Google buying out t mobile USA. How would such a merger transform the wireless industry. Please comment i want to hear your thoughts on that as impossible as it seems.
47. snowgator (Posts: 3197; Member since: 19 Jan 2011)
No advantage to Google on that deal. They are in position to become the world leader OS (numbers only), why take on a project like a carrier with all the hardware problems like a T-Mobile when that is not your strength? T-Mobile is easily in position to rebound- a good (not great) national network, name reconigtion, and a fairly loyal subscriber base, recent losses accepted. Someone should stand to profit real well from this, Deutsche Telekom wants to concentrate on the non-U.S. market that is wayyyyyy more profitable for them and just wants out. (What is the proper way to pronounce "Deutsche"? The way I keep saying it in my head is a female cleansing product. Probably not correct, huh?)
48. ddsindpls (Posts: 17; Member since: 16 Sep 2007)
Sprint does not need another network. CDMA, ISDN, GSM? Bad idea.
49. downphoenix (Posts: 2287; Member since: 19 Jun 2010)
If this happens, it will certainly be smoother than the Nextel merger.
T-mobile will probably be maintained independently until LTE becomes the norm for new phones, and they will probably still maintain their CDMA as Sprint and GSM as T-Mobile independently, not unlike how Alltel is still operated independently from Verizon and just being slowly phased out, they will do the same to T-mobile as GSM gets phased out slowly. The merger will be in name only really until then, the only thing that might come out of it besides that is integration of the billing systems, etc. to help lower operating costs.
50. luis_lopez_351 (Posts: 951; Member since: 18 Nov 2010)
seriously man what with the thumbs down ;)
52. dIESEL88 (unregistered)
WELL THIS APPEARS TO BE A RATHER IRRELEVANT STORY NOW....