T-Mo May Buy Sprint

T-Mobile's parent company Deutsche Telekom is seriously considering merging with or taking over Sprint, claims the German national magazine Der Spiegel. A continued weakening of US currency values, combined with worsening results at Sprint, is reportedly leading the European company to investigate transactions that would help T-Mobile USA gain ground in the US market and better compete against AT&T. The opportunity is rare and would cost Deutsche Telekom less than it did to buy VoiceStream in 2001 and assume its role as one of the largest American carriers, according to the report.

There are no formal proceedings in place, say the alleged sources for the transaction, and a deal may not occur. Officials at Deutsche Telekom have declined to comment on "market rumors." Sprint has not commented on the matter.

The alleged insiders have not explained how a technical union of the networks would be completed. While T-Mobile uses the internationally popular GSM standard, Sprint continues to use the chiefly North America-focused CDMA format for its calling and would require that subscribers trade in their handsets for versions compatible with T-Mobile's network.

Any alliance between Sprint and T-Mobile would also instigate a major shift in the balance of cellphone technology. AT&T is the current leader in the US market but is the only other major provider besides T-Mobile that operates on a GSM-based phone network in the country, with Sprint and Verizon collectively supporting many more CDMA subscribers. Carriers smaller than T-Mobile, such as Alltel and US Cellular, also opt for CDMA. A newly enlarged T-Mobile using GSM for every customer would compete very closely with AT&T and would potentially draw customers, as GSM phones can be unlocked much more easily than CDMA devices.

By Electronista Staff

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industry, sprint, AT&T, T-Mobile, Alltel, Deutsche Telekom, US cellular