T-Mobile’s parent company, Deutsche Telekom, has called in banking advisers to study a possible 11 billion dollar bid for Sprint Nextel, the third-largest mobile phone operator in the US, reports the London Telegraph.
A combined T-Mobile USA and Sprint would nearly match AT&T, with nearly 78.2 million customers. Shares in Sprint Nextel jumped more than 11 percent in the first hour of trading this morning, up 42 cents to $4.19, after the story appeared.
The rumor of T-Mobile’s bid for Sprint comes just days after Deutsche Telekom announced that its U.K. T-Mobile business will merge with France Telecom’s Orange carrier.
In the U.K., the Orange and T-Mobile merger (third and fourth spots on the market), will create the country’s largest wireless carrier, with a combined 37 percent share of the market. O2 and Vodafone have 27 and 25 percent of the market at the moment.
“The different standards make a migration of the subscriber base extremely time consuming,” said Frank Rothauge, an analyst at Oppenheim Research. He believes an offer for Sprint would hurt Deutsche Telekom, and doesn’t see a takeover in the next two years. Sprint uses CDMA while T-Mobile uses GSM/UMTS
T-Mobile USA, like its parent, has committed to moving to Long-Term Evolution (“4G”) standard while Sprint, with a 51% stake in Clearwire is already promoting a 3G/WiMax dongle for data roamers.
Conceivably, T-Mobile could convert Sprint to the UMTS standard, then spin off their WiMAX unit (after keeping some 2.6GHz spectrum for their LTE implementation). Sprint has outsourced network management of their network to Ericsson, one of the loudest critics of WiMAX.
T-Mobile already has AWS band frequencies that they now use for HSPA data services. T-Mobile expects to have its 7.2Mbps HSPA service online by the end of 2009 and introduce HSPA+ service at 21Mbps at some point in 2010, using their AWS frequencies for which they paid $4.2 billion at the 2006 auction.
The 2.6GHz band owned by Sprint/Clear/Comcast has plenty of bandwidth. T-Mobile might grab some for LTE expansion. That could leave AT&T and Verizon at a spectrum disadvantage.
And spectrum is the lingua franca in the broadband economy.
Clear expects to offer 4G service in markets covering 30 million people at the end of 2009 and cover 120 million people across 80 U.S. markets by the end of 2010. Clear’s mobile broadband plans start at $30 per month.
The United States is the 3rd largest wireless market, according to the CTIA. The CTIA reports there were about 270 million total wireless subscribers in the USA at the end of 2008, with about 87% penetration. They include Verizon (86M), AT&T (78M), Sprint (49M) and T-Mobile USA (30M) which total about 243 million.
The CDMA Development Group says world-wide there were 502 million people using the CDMA family of technologies at the end of the second quarter of 2009 (including cdmaOne), with 494 million CDMA2000 subscribers and 128 million EV-DO broadband users. Large cellular companies — including Sprint — are likely to move to LTE in the future.
Infonetics Research forecasts the worldwide WiMAX equipment and devices market to hit $4.9 billion in 2013, predominantly driven by developing countries.
