Bloomberg: Sprint and T-Mobile USA in merger talks

“Deutsche Telekom AG has held talks to sell its T-Mobile USA unit to Sprint Nextel Corp. in exchange for a major stake in the combined entity, said people with knowledge of the matter,” Serena Saitto, Jacqueline Simmons, and Jeffrey McCracken report for Bloomberg.

“Talks have been on and off, and a deal may not be reached, said the people, who spoke on the condition of anonymity because the talks are private,” Saitto, Simmons, and McCracken report. “The companies haven’t been able to agree on the valuation of T-Mobile USA, which reported a drop in profit in the fourth quarter, the people said.”

“A merger of Sprint and T-Mobile USA would combine the third- and fourth-largest U.S. wireless providers behind Verizon Wireless and AT&T Inc. T-Mobile USA may be worth $15 billion to $20 billion, according to Michael Kovacocy, an analyst at Evolution Securities in London,” Saitto, Simmons, and McCracken report. “Sprint’s market value was $13.6 billion as of yesterday’s close.”

Saitto, Simmons, and McCracken report, “T-Mobile, which accounts for about a quarter of Deutsche Telekom’s sales, has lost customers at an accelerated rate as it trailed rivals in building out a third-generation mobile network and missed out on being able to sell Apple Inc.’s iPhone.”

Read more in the full article here.

MacDailyNews Take: [Apple’s new iPhone] will change the mobile device market in radical ways. I am, if anything, understating the havoc iPhone will cause.SteveJack, MacDailyNews, January 10, 2007


    1. With the advent of Verizon’s CDMA iPhone it wouldn’t make a difference. The problem will be the conflicting technologies Sprint inherited when it bought Nextel. That should all be resolved with the migration (complete by end of 2013?) to LTE.
      T-Mobile is giving up because they don’t have the resources (and Deutsche Telecom doesn’t want to supply it) to install an LTE network.
      A better buyout/merger would be Sprint and Verizon, and ATT and T-Mobile. Network compatibility would make both deals easy. The only fly in the ointment is the DOJ. Would Justice allow it? That’s problematic.

  1. If Deutsche Telekom AG is interested in selling T-Mobile, it should be Apple that buys it. T-Mobile’s national infrastructure would allow it to quickly establish its own wireless GSM network (albeit with a bit of a frequency hurdle for existing Apple iPhones and iPads), and provide the towers for a roll-out of LTE. That would allow Apple to complete a vertically-integrated mobile ecosystem and provide new services/products that we would never see from the existing dinosaurs. It would also allow Apple to swap out existing T-Mobile smartphone customers to iPhone. Even T-Mobile’s dumb handset subscribers could be put in play for a new iPhone nano. Now THAT is what I would call a game-changer.

        1. You obviously have never sought approval for a cell tower – the ground-up creation of a national wireless network would be virtually impossible today, even with Apple’s cash.

      1. …or they could be waiting for Sprint to buy T-Mobile and then get the whole shebang(!) for the ultimate “SprinT-MobileMe” experience of always being connected.


  2. What a fscking mess this will be for customer service. Until they get network upgrades rolled out and all the legacy phones replaces, some will work in some places and some in others. Took them, what, four years to digest Nextel. What might make sense in the boardroom will create endless headaches for engineering, poor service, and customers migrating elsewhere….

  3. When I had my company on T-Mobile.. the entire 2 weeks of ownership was great customer service… but the phones and dropped calls were horrid. So we went to AT&T… not overly thrilled with their customer service but its way better than sprint was. It would be interesting if Apple bought any phone company, but I think if they did they would have to roll out tower updated immediately. Apple only represents high end quality, I couldn’t see them having a phone network with a good amount of people complaining about service. Plus T-Mobile runs on a different frequency than AT&T so it may be an easy change to allow both on the towers but you have to think about existing customers. Apple wouldn’t upgrade people to a newer device on the better frequency for free. But I’m sure Apple would be competitive in price, I would be shocked though to see them with a mobile company.

    All in all, I think Apple would come out with data plans instead. Not sure how but if you think about it, eventually there will be no more minutes on phones.. its all data. I don’t need a phone line to make a call I just need a web connection and I think Verizon and AT&T will start rolling out more options for portable wireless devices just like sprint offers for the ipod touch. Its pretty sweet in my opinion. Take your touch, slap on a data connection and hook up with skype/vonage or some voip of your choice and your good to go. Unlimited whatever you want for 1 set price a month. Nights and weekends included!

  4. So, how’s that going to happen? They use totally different tower technology. Sprint is CDMA like Verizon and T-Mobile is GSM, like AT&T.

    Does this mean the cute T-Mobile chick will replace the flasher in the raincoat in the Sprint commercials?

  5. It would be ironic if Apple took all the money they made selling phones to ATT and Verizon and used it to buy their own system.

    Not probable, just ironic…..

  6. Unlike most mergers, this one would make sense, as these two companies are bottom dwellers stealing each other’s customers. They need size in order to compete with AT&T and Verizon. This would put them close to 80M, which is right in the ballpark.

    I imagine the cell tech incompatibility would be fixed as they both go to 4G.

    I did send an email to Steve over a year ago, asking if he was thinking about buying Sprint, and spinning it off. The margins on a cell network would drive Apple shares lower, so spinning it off as a separate company would prevent that. Then he could offer iOS owners unlimited data for a reasonable price. Essentially running the Apple network like iTunes, where they make a small profit, but drive customers to buy the hardware, where they make a big profit.

    No, Steve didn’t answer my email. boohoo.

  7. @ Ralph M

    Today’s economy is just right to make it easier for cell tower approval. Municipalities are hurting financially. In my little city of less than 30,000 we just approved a new celll tower and our city is cutting… cutting… cutting… back on emoyees and services, but not cutting back on raising taxes.

    1. Again, you are obviously not in the biz. The vast majority of cell towers are not on public land or in public right-of-ways. For the most part, unless you are leasing or franchising public property, local governments get very little if anything from a cell tower installation.

      Also, even if local governments wanted to be helpful, the real problem is securing locations that can be permitted. Especially in dense urban areas – where iPhone usage is the highest – getting cell sites is nightmarishly hard.

      Again, if Apple wanted its own mobile network – and I’d argue there are good reasons to control the “pipes” – it would be far, far easier (and probably cheaper) to buy an existing network than to build one from scratch.

    2. Sometimes it is necessary to raise taxes. Tax revenues are used to pay the salaries of those city employees, for instance. Cutting taxes will result in an increase in revenue only when the gains in growth (beyond what would have occurred under the status quo) exceed the associated tax rate reductions. Obviously it does not make sense to cut taxes to zero. There is a tax rate value that balances growth and revenue. Tax cuts are *not* the answer to everything! The broken piece of the government financial equation for the last several decades has been the spending side.

  8. Sprint/TMO might make sense for merging both networks on LTE, but not before then because of the incompatible technologies they have now. Both companies are also losing subscribers, so it’s a gamble that they wont continue to bleed after the merger. After the merger, the combined company wouldn’t have the capital (or time) for an LTE build out.

    What would make more sense to me is a Google buyout of Sprint — with Google’s brains and $ coupled with Sprint’s Internet backbone holdings, Google could position themselves as a new triple play provider. Perhaps Sprint is wanting to delay/avoid their own takeover with the TMO deal?

    is that Sprint “owns” the Internet backbone

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