Sprint Merger Rumors



The Wall St Journal reports that Deutsche Telekom–parent company of T-Mobile USA–is considering buying Sprint Nextel. That would make T-Mobile + Sprint the largest wireless operator in the U.S.

Right now, buying up Sprint’s stock would cost DT just $22 billion. There are big pros and cons, says Information Week.

  • Pros:
    Cheap spectrum. – If DT buys Sprint, it will automatically inherit Sprint’s largest asset, its vast spectrum holdings. Sprint owns spectrum in the 850, 1900, and 2500 megahertz bands. DT would buy into Sprint’s 50+ million customers, making T-Mobile USA and Sprint an 82 million member mega network. Sprint has an active enterprise customer base who use BlackBerries and other smartphones. Enterprise customers spend big bucks every month to access the voice and data networks.
  • Cons:
    Network nightmare – How would DT merge the iDEN, CDMA, GSM, and WiMax networks into a cohesive, working system? DT would have to decide almost immediately what to do with Sprint’s planned WiMax network. Should it keep the ball rolling, or switch 4G strategies altogether? This decision would have a serious impact on the financial stability of the company going forward.

Right now, any solid decision is weeks or months away, say observers.

Meanwhile, Cyren Call, a company founded by Nextel founder Morgan O’Brien, is trying to assemble a consortium of investors to acquire Nextel, says the WSJ.

Other rumors persist that Comcast and Time Warner Cable have been negotiating with Sprint, Clearwire, Intel, and Google about Mobile WiMax. According to Fortune, the plan is to combine Sprint’s and Clearwire’s wireless spectrum and build a nationwide mobile broadband network — to be shared by Time Warner Cable, Clearwire, Comcast and Sprint. Comcast has more than 14 million cable modem customers and 5 million Digital Voice customers, both segments growing fast.

Don’t forget SpectrumCo, the cable consortium that won a batch of Advanced Wireless Services (AWS) spectrum in the fall of 2006. The active members in SpectrumCo are Comcast, Time Warner Cable and Bright House Networks’ parent Advance/Newhouse. Cox and Charter’s Vulcan Spectrum also own chunks of 700 MHz in Seattle and Portland.

How about a cable (SpectrumCo) and cellular (T-Mobile) consolidation around AWS? Or how about a Cable/T-Mobile/Sprint/Google/WiMAX front versus an ATT/Verizon/Microsoft/LTE consolidation?

Who will win the holy war? Consumers, of course! [Only kidding]

Posted by Sam Churchill on .

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