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Deutsche Telekom Considering Purchase of Sprint Nextel?


News by Michael Oryl on Monday May 05, 2008.

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According to a piece published by German magazine Der Spiegel over the weekend, Germany's Deutsche Telekom, parent of T-Mobile USA, is considering the acquisition of Sprint Nextel, a move that would, as Der Spiegel put it, catapult T-Mobile USA into the number one spot in the U.S. market.

So far, though, Der Spiegel has not indicated in any form where it obtained this information, and, as many have pointed out, such a deal that would see T-Mobile USA and Sprint Nextel merged as a single company would have to overcome many hurdles - some of which are technical in nature.

Consider that T-Mobile USA is a GSM (and, as of this week, UMTS) based carrier, while Sprint Nextel still has yet to merge the disparate networks from the individual Sprint and Nextel units, which run on CDMA and iDEN, respectively. That base incompatibility alone makes such a merger seem unlikely to us. And as Bloomberg reports, there are a number of non-technical issues at hand, such as the poor financial ratings of both Deutsche Telekom and Sprint Nextel, as well as potential issues the U.S. government would have with a foreign interest owning the largest mobile carrier in the country.

On the plus side, however, Sprint Nextel stock is trading at a low price and the dollar is quite weak against the euro, making the cost of acquiring Sprint Nextel a bit easier to choke down. Der Spiegel notes that the cost per customer to acquire Sprint Nextel would be clearly less than that which Deutsche Telekom paid when it bought Voicestream to form T-Mobile USA 7 years ago.

All of this is, of course, speculation. Deutsche Telekom has made no official statement at all so far.

 

About the author

Michael Oryl
Michael is the Philadelphia based owner and former editor-in-chief of MobileBurn.com. You can follow him on Twitter as @MichaelOryl

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