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

20 Comments

  1. @ 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.

  2. 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

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.