The Next Move for T-Mobile

T-Mobile has been rather like an unwanted child to its parent company, Deutsche Telekom.  The German telecommunications company has been reluctant to spend very much in the U.S., with the result that T-Mobile has been left behind while the other major carriers are moving toward 4G LTE networks and offering the iPhone. Deutsche Telekom was eager to escape the US market with the proposed $39 billion sale of T-Mobile to AT&T. But last August, the US Justice Department stepped in with a lawsuit to block the sale, and the FCCchairman called for AT&T to show that the acquisition would serve the public. AT&T’s willingness to put itself on the hook for a breakup fee of $3 billion cash plus another $3 billion in roaming agreements and assets indicated a real commitment, but what is the future for T-Mobile if the deal falls through?


T-Mobile’s strategy over the past year has to been to compete solely on price, emphasizing their drastically reduced rates and heavily promoting their prepaid service. But this strategy won’t stabilize the business.

They could take that $3 billion breakup fee and buy wireless spectrum, possibly from Clearwire, which may need the cash, or from Dish Network, which might scrap its own plans to build an LTE network if the price was right, or partner with T-Mobile in building the network. T-Mobile might also try to pick up some regional carriers, like Metro PCS or Leap Wireless, although they use a different wireless technology. This would make T-Mobile more valuable if it were to be on the market again. But it seems unlikely that Deutsche Telekom will be any more willing to invest in T-Mobile than it has been before.

Cable companies are also possible partners for T-Mobile.  Cable providers have plenty of spectrum available and after the failure of Pivot, their joint venture with Sprint, they may be looking for a new partner to help them exploit it. And cable providers might eventually take over T-Mobile, freeing Deutsche Telekom from its involvement.

A merger of equals between Sprint and T-Mobile is also a possibility, but the cash strapped Sprint  couldn’t buy T-Mobile outright, so Deutsche Telekom would remain with a large stake in the resulting company.’

Finally, T-Mobile could look for another major international wireless company to adopt it. One possibility is China telecom Corp, which has announced plans to start offering service under its own brand next year. However the acquisition of a major American company by Chinese one might be wildly unpopular, and would surely draw the ire of politicians.

Jack Dunnington is an a T-Mobile phone user who has been greatly concerned and frigtened by the possibility of a take-over. Through his website people find phone numbers for companies such as for the t-mobile customer service.

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