T-Mobile Parent Angling to Scoop Up Sprint?
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Deutsche Telekom, owner of T-Mobile, could be angling to scoop up Sprint in a bid to improve its overall bottom line by expanding its U.S.-based business.
German-based Deutsche Telekom (NYSE: DT) asked banking advisors to evaluate a multi-billion dollar bid for Sprint (NYSE: S), the No. 3 mobile phone company in the U.S., according to a report in Telegraph U.K.
The company's decision to call in Deutsche Bank to prep for a Sprint buy-out deal comes as DT just merged its struggling T-Mobile U.K. arm with Orange UK to create the U.K.'s largest mobile operator.
By press time, spokespeople for Sprint and T-Mobile had not returned calls seeking comment. DT spokeswoman Anna Bischof declined to comment on the reports.
T-Mobile is trailing behind its larger rivals, No. 1 Verizon Wireless, which carries many popular BlackBerry devices from Research In Motion (NASDAQ: RIMM) and is half-owned by Vodafone, and No. 2 AT&T, the exclusive carrier for the Apple (NASDAQ: AAPL) iPhone. However, if T-Mobile were to merge with Sprint, the No. 3 carrier in the U.S., it could close the gap in catching AT&T.
Sprint, which is currently the only carrier for Palm's (NASDAQ: PALM) webOS smartphones, the Pre and Pixi, is trying to mount its own comeback but is still losing subscribers.
Sprint lost a total of 257,000 net wireless subscribers in the second quarter -- 991,000 postpaid subscribers left, but it gained 938,000 prepaid iDEN customers. Sprint finished the quarter with 48.8 million total wireless subscribers, down from 49.1 million at the end of the first quarter.
Verizon Wireless, the country's largest wireless carrier, added a net 1.1 million subscribers in the second quarter for a total of 87.7 million customers.
AT&T in the second quarter added 1.4 million net subscribers, boosted by activating more than 2.4 million new iPhones. AT&T is the second-largest carrier with 79.6 million subscribers.
T-Mobile is in fourth place with 33.5 million customers at the end of Q2, though it has earned a reputation for offering Android-based handsets in the U.S. by launching the G1, the HTC myTouch and most recently Motorola's (NYSE: MOT) new Cliq.
Sprint became the second U.S. carrier aside from T-Mobile to unveil plans for selling an Android smartphone -- the HTC Hero, which goes on sale Oct. 11.
A T-Mobile-Sprint deal would come with a measure of controversy, however, as the T-Mobile and Sprint networks are incompatible, the former having GSM and the latter CDMA. Sprint, which also recently bought Virgin Mobile, holds a minority stake in Clearwire (NASDAQ: CLWR), which is using WiMax for its 4G technology, as opposed to LTE, which DT chose.
The deal could also face scrutiny from regulators, as it would cut the number of major mobile carriers in the U.S. from four to three at a time when the FCC is reviewing the wireless industry to see if it unjustly benefits the carriers over consumers.