T-Mobile US Interested in Sprint's Acquisition

According to the latest news around the Internet, T-Mobile US might be interested in acquiring Sprint Nextel, the third largest carrier in the country. UK-based newspaper The Telegraph reports that Deutsche Telekom, T-Mobile's parent company, might submit a bid for Sprint, and that it has already called banking advisors to study the possible take over of the $10.6 billion US carrier.

It seems that an announcement on a possible deal between the two companies is expected to surface in the following weeks, yet it might all prove to be just a rumor, as it happened in the past as well. On the other hand, the deal would follow shortly after Deutsche Telekom announced partnering with France Telecom to merge their UK units, T-Mobile and Orange, and might follow the same pattern.

Sprint, which has been valued at around $10.6bn (£6.3bn), is currently the third largest carrier in the US, and faces strong competition from Verizon Wireless and AT&T. At the same time, T-Mobile US is seen by DT as performing rather poorly on the market, as the company blames it and its UK subsidiary for a €1.1bn first-quarter loss. When it comes to the funds for the transaction, DT is reported to have appealed to its shareholders.

“Any takeover or merger would be a regulatory nightmare though, as the US government would be unlikely to allow another telecoms takeover by a company that has a substantial shareholding by the German government - whilst a merger would result in Deutsche Telekom becoming majority owned by US shareholders. The German government in turn may not approve of that result,” notes cellular-news.

In case the two companies merge, the new carrier will account for the second position on the US market when it comes to the number of subscribers. On the other hand, their existing networks might become a problem for the deal, as there will be three of them to take care of: iDEN, CDMA and GSM. Given the fact that, for the time being, all is speculation, we should wait to hear an official statement from either of the companies.