Thursday, May 24, 2012

Deutsche Telecom Would Consider A Merger, But Won’t Sell T-Mobile


While addressing shareholders at the company’s annual meeting in Cologne, Germany, Deutsche Telekom CEO Rene Obermann told investors that a complete takeover of T-Mobile USA was out of the question after AT&T’s very public failed bid last year. Obermann did tell investors that it was considering all other options, including a potential merger of its T-Mobile USA business unit with another organization.
There are several options on the table in such a scenario; Sprint has had its eye on T-Mobile USA for a while, and a combined company would present a large competitor to AT&T and Verizon. Such a scenario is unlikely, however, as the technology these companies employ is so different that it would be extremely costly to make the networks compatible.
The more likely potential suitor is MetroPCS, as recent rumors have suggested that the two companies are actively speaking about a possible merger. Bloomberg reported a few weeks back that the company was essentially looking to do a joint venture with MetroPCS, with Deutsche Telekom holding the majority stake of the combined company. The deal could be similar to the Everything Everywhere carrier in the UK, a joint venture between T-Mobile and Orange. Deutsche Telekom is also considering a network sharing agreement with MetroPCS or Sprint, which would have the companies sharing spectrum but maintaining their current status as standalone organizations.
Meanwhile, it’s business as usual for T-Mobile USA. The company is beginning to actively build out an LTE network over the next two years. Time will tell the fate of T-Mobile USA, though the message from Deutsche Telekom is still crystal clear.
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