US telcos Sprint Nextel and T-Mobile USA have held talks over merging their American mobile phone businesses, according to media reports. Citing an anonymous source familiar with the situation, the Financial Times reported today that no decisions have…
US telcos Sprint Nextel and T-Mobile USA have held talks over merging their American mobile phone businesses, according to media reports.
Citing an anonymous source familiar with the situation, the Financial Times reported today that no decisions have yet been made on the merger.
But there have reportedly been discussions on creating a new US company, in which Deutsche Telekom (which owns T-Mobile USA) and Sprint will both hold a 50% stake.
Deutsche Telekom and Sprint would not comment on the speculation.
DT’s CFO, Tim Hottges, said yesterday that “all options” remained open for DT in the US.
He said: “This [set of options] includes disposing of parts or all of the business. Or bringing a partner on board. Or going public. Or just entering into a network partnership.”
He added that DT “was not under any pressure” and intended to find the best solution.
A merger would be an obvious step for Sprint and T-Mobile, as they are currently struggling to compete against the dominant mobile operators in the US market: AT&T and Verizon Wireless.
AT&T currently has 95.5 million subscribers. Verizon Wireless has 93.2 million. Meanwhile, Sprint reported 49.9 million customers at the end of 2010, while T-Mobile USA had only 33.7 million, and this number fell by 390,000 in 2010.
A potential merger between the Sprint and T-Mobile USA is complicated by the fact that, at least currently, the two companies are effectively backing rival wireless technologies.
T-Mobile USA is in the process of rolling out an LTE network. Sprint, on the other hand, has a majority stake in Clearwire, which is developing a network using WiMax technology.
It is also still operating some forms of older technology, including the Integrated Digital Enhanced Network (iDEN), although this is being phased out from 2013.
The report comes after rumours in February that Sprint was in talks about a potential partnership with US satellite/terrestrial venture LightSquared.
LightSquared, which is currently rolling out its own LTE network in the US, was reportedly planning to use Sprint’s equipment to accelerate the deployment of its ground infrastructure.
It was reportedly planning to utilise spare capacity on Sprint’s network.
LightSquared said that it would not comment on rumours.
The FT also reported today that DT is near to appointing advisors for the sale of T-Mobile USA towers, which could raise US$2bn for the company.
Back in late February, DT told TelecomFinance that it was planning to start looking for buyers for the towers in Q2 2011.
A DT spokesperson said at the time that the sale would only happen if it fitted with DT’s strategy and the valuation was attractive.
In February, Deutsche Telekom also published mixed results for T-Mobile USA. Revenue for 2010 was E9.1bn, which had increased 2.1% from 2009. But 2010 EBITDA was E900m, down 2.3% from the figure for 2009.
