updated 09:55 am EST, Tue March 8, 2011
Sprint talking buyout of T-Mobile US division
Sprint has been negotiating with Deutsche Telekom to buy T-Mobile USA in what would be a major shakeup of the US Cellular industry, sources alleged on Tuesday. The discussions hae been cast as "on and off" due to a dispute over how much T-Mobile would be worth, but the pursuit has raised the prospect of DT having a formal stake in the resulting union. The German company would own about half of the unified firm in this strategy, Bloomberg heard.
T-Mobile in a response didn't confirm or deny the talks with Sprint but acknowledge that it could sell all or some of T-Mobile. The company has also also acknowledged that it was considering a deal with Clearwire for spectrum as it moves into 4G. Sprint chose not to comment.
A union between the two would be an attempt to stem bleeding at both carriers. T-Mobile has swung back to losing customers and saw many of its gains shrink in recent years. Sprint has finally added postpaid subscribers after years of losses but is still losing hundreds of millions of dollars per quarter. The blame in many cases has been put on their respective lacks of true halo devices, such as the iPhone or Droid X.
Uniting the two would pose technical challenges around the network. Sprint would likely switch to GSM to get T-Mobile's better world roaming but would have to upgrade thousands of cell sites. It might also eventually phase out its WiMAX network since T-Mobile is moving to 42Mbps and eventually 84Mbps HSPA+, either of which can easily outrun WiMAX. Overhauls as part of Sprint's Network Vision project have made this easier, since they would let Sprint keep its CDMA and WiMAX as long as necessary while it added GSM.
T-Mobile would also have the option of adding frequencies to its 3G support and might have an opportunity to use the more popular 1,900MHz band, which AT&T also uses on some parts of its network. The move could give it access to the iPhone and a much wider array of devices without having to arrange for custom hardware as it does today. T-Mobile has been hinting at negotiating for the iPhone but has remained silent on how it was coming along, if at all.