T-Mobile's owner might consider buying Sprint, say analysts

By Jacqueline Emigh | Published March 7, 2008, 4:57 PM

Much beleaguered Sprint Nextel might get bought out by Deutsche Telekom, the owner of major wireless competitor T-Mobile, according to an analyst report.

In a report issued yesterday, Merrill Lynch analysts cited industry pricing as the reason why Deutsche Telekom -- the world's sixth largest telecom carrier -- might acquire Sprint Nextel, despite Sprint's operational difficulties and sinking position in the US mobile market.

The analysts speculated that, due to these very problems, Sprint looks likely to launch a price war that could impactly adversely on the US arm of T-Mobile, widely regarded as the "low-cost alternative" among the top five US wireless carriers.

"In such a price war scenario, we think T-Mobile would face the most pressure, and Deutsche Telekom would see the increased urgency to drive market repair," according to the report.

But Merrill Lynch also said it isn't aware of any talks between Deutsche Telekom and Sprint around an acquisition -- only that the former company is considering the possibility.

Sprint has already moved to lower pricing by adding more voice and data calling capabilities last week to its existing $99.99 per month "Simply Everything" plan.

Yet Sprint's own earlier acquisition of competitor Nextel seems to have played heavily into Sprint's own current operational and financial woes. As many observers see it, Sprint has been overburdened by trying to manage its own long-time cellular network, together with Nextel's network and the emerging Xohm 4G broadband WiMAX network.

A buyout may be a particular bargain right now in light of Sprint's falling share prices and the overall weakness of the US dollar, according to the analysts' report.

Comments

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Hmmm... seems like if Nextel ruined Sprint, then T-mobile would think twice about buying Sprint...

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It's an interesting proposition, but Deutsche Telekom is such a mess now, due to land line losses in Germany that U.S. T-Mobile would probably be in the same situation in a year as Sprint is "enjoying" now.

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ummmm not sure this would be a good thing. It sounds like to me they are just buying or consider it just to prevent a cell service war. Sprint should lower there price to $89 or less then maybe they could get back all the people that have left for other providers. I am waiting for one to come out with a $99 unlimited for the first 2 phones then $20 for each after.
If Sprint were to offer $69 unlimited for the first 2 lines and $20 for each additional lines they would get back lots of the ones they lost. The only thing that would stop some is Sprints customer service. If they did this and fixed there customer service they could get back on top.

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"impactly adversely"

I think its code....

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Normally, I'd figure that TMo would stay away from this, but DT is probably hurting from Sprints $99 Simply Everything plan. I joined TMo a while back because it was value for dollar cell service and kept it because it was clear from the getgo that their CS kicked butt. I've NEVER had a billing issue or phone problem they weren't just abosultely awesome about. They have never, ever been rude to me and I'm always smiles talking to their reps.
That said, I'm guessing there are many people like me that joined as individuals for the great low cost rate plans they have. It's not just the rate plans, but unlike ATT and Sprint (AT the TIME), TMo had unlimited text and unlimited net plans first, vs. 5mb for so and so or 300 txt for so and so etc.

Currently, they can't compete (on an individual subscriber basis) with Sprint's $99 plan. Not only are they behind on speeds, but also a bit on tech (no gps, 2way, tv or radio, though you can get at least tv/radio with inet and ie/opera). Right now, value IS Sprint's $99 for all that vs. TMo's $99 for voice and net/text. Unless they roll out 3G asap and are able to put out Sprint competing features, I'd say the best way to NOT lose customers to Sprint is to buy it if possible. And I have no doubt that DT can buy Sprint if it were ever up for grabs.

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The only reason that they would do this is for the customer's no other logical reason, it would be to expensive to integrate Sprint with Tmobile.

www.talkprice.net

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The only positive thing I can see with this is if they made phones that worked with GSM and CDMA networks. This would make sure they have the best coverage area of all the cell companies because they would work on all networks. Plus they would get the advantage of what R&D Sprint has done with WiMAX.

I'm not sure if this would be a good idea for T-Mobile but if say AT&T bought Sprint it may work better because AT&T has more money to throw around. I doubt its going to happen anyway.

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Actually, a better solutions is to get rid of the CDMA -- it has no reason to exist.

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I would rather them get rid of GSM! CDMA's voice quality sounds a lot better than GSM's.(to me)

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2G CDMA is an inferior technology that drops calls a lot more than TDMA or GSM.

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Funny how much of the world is now using 3G data access based on CDMA now. Obviously, CDMA and W-CDMA have no reason to exist. ;-)

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In my own practical usage, it's the expensive GSM phone that's always dropping calls, not my CDMA phone or the previous CDMA phone or the previous CDMA phone.

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I guess you're one of the unlucky 0.001% that has more dropped GSM calls than dropped 2G CDMA calls.

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Please NO NO , I like Tmobile as it is. I have no problems with them . Spring and Nextel have been a total failure.

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The problem with Sprint is/was management and customer service. Now that they have a new CEO if he's smart he'll fix this. If I were him I'd do a few things.

1. I would re-train all the customer service agents and the ones that got really bad marks I'd fire.

2. I'd put all of Nextel on the CDMA network and not add anything more to the PTT at the moment, just expand CDMA. Put towers up where people are complaining they get dropped. If they want to really compete with Verizons network they have to put a tower where ever a Verizon tower is, OR set up something with Verizon where they will just let Sprint use their network (giving everyone free roaming).

3. I know why they want WiMAX and they want to be the first to have a head up against the rest, but they need to do this with a positive cash flow. If their WiMAX network doesn't catch on or if it fails in some way, Sprint is a goner.

Now if T-Mobile does buy them out then maybe T-Mobile can fix Sprints management and customer service. I hear T-Mobiles customer service is good so if they make the Sprint customer service like that then thats one problem gone.

Like I said before IF they can make phones that use all networks that could be good for all. The only problem I see with this is does T-Mobile have the capitol to do this? I know AT&T does, but AT&T is probably 3 times the size of T-Mobile.

The other good thing I see if SOMEONE buys Sprint is that if Sprint goes out of business then Verizon is the only CDMA carrier in some areas (Los Angeles for instance), so they can just raise the prices and people who don't like AT&T and T-Mobile won't have any other company to go to.

I do like the idea of a GSM cell carrier buying Sprint if they make hybrid phones.

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Sprint and Verizon need to upgrade their network to GSM or better yet HSPDA/UMTS.

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I for one think it would be silly. If most of Sprints problems financially stem from them acquiring Nextel and trying to manage two networks and get a new one up and running, then why the heck would anyone want to take on that burdon and manage their own network and get 3G finally up and going? It just doesn't seem like a smart plan to me. Correct me if I'm wrong and tell me how this would be in T-Mobile's best interest.

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You can't look at T-Mobile's financial ability without taking into account Deutsche Telekom who owns them. Deutsche Telekom offers millions of private and corporate customers all over the world the entire spectrum of modern information technology and telecommunications services – whether fixed-network, wireless and broadband or complex IT and telecommunications (ICT) solutions for business customers. It is HUGE in Europe - Also consider the Euro to US dollars as it is currently, it might even be prudent to purchase to make sprint/nextel go away. However, I hope if they do purchase them, the integrate it somehow into their current T-Mobile. T-Mobile is a smart, reliable, customer friendly company that is going to be unleashing some great products in the near future - I hope that something like this gives them more umph to get it done.

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T-Mobile is also a company with very little coverage compared to AT&T. If you want a smart, reliable and consumer friendly company then AT&T is the best company out there. AT&T is the only mobile phone company in the USA that focuses on what's most important: network coverage. What good is great customer service if a company can't provide good coverage?

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Most cell users are urbanites who rarely travel more than twenty miles from home. Coverage isn't that big of an issue for the major carriers. AT&T, in my experience, has average customer service overall and no particular concern for an individual customer since they have so many.

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AT&T doesn't need top notch post sales customer service because their phone service just works. I can't say the same for T-Mobile. While T-Mobile has great customer service, they are tied with Sprint for being the #1 carrier for the most dropped calls and having the worst reception.

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My short-lived experience with AT&T was about the same as what you've described. For context, I signed on with Cingular some 6 months before their acquisition by AT&T.

After the acquisition, I had an unexpected problem that was an absolute deal-breaker; my phone would place outbound calls but would not receive any inbound calls. Everything inbound went to voicemail, which thankfully still worked.

I gave the problem two weeks, with AT&T technicians on and off the phone, asking me repeat questions, having me power cycle the telephone, escalating my case, and offering callbacks that they obviously could not fulfill as my inbound connection was bust.

I was patient for two weeks with this problem while my consultancy suffered, which is not their concern but it meant everything to me. I haven't tried T-Mobile but FWIW Sprint, my carrier for the last two (or so) years has shown themselves to be equally incapable of solving problems. I thought about switching to Verizon but they're probably full of hot air just the same.

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