Does “T” Stand for “Trouble?”

Michael Harris is Principal Consultant for Kinetic Strategies

Rumors about a possible sale of T–Mobile by Deutsche Telekom have swirled around the wireless industry for months. The latest prediction comes from Bloomberg Business Week, which estimates a sale of T-Mobile today would fetch $16.8 billion, only 60 percent of what Deutsche Telekom has invested in the American wireless carrier.

US Market: Carrir Subscriber Share 2010

Combining Sprint and T-Mobile would boost their total U.S. mobile market share to 27%.

Sprint is commonly mentioned as the most likely buyer or merger partner for T-Mobile. With Sprint, T-Mobile would solve a key problem — insufficient scale and spectrum for 4G upgrades. Sprint is loaded with spectrum, and by combining, the carriers would boost their total U.S. mobile market share to 27 %, placing them in striking distance of AT&T (31%) and Verizon (33 %), according to Chetan Sharma Consulting.

A key obstacle to the combination is that the networks of Sprint and T-Mobile are currently incompatible. Sprint’s network is CDMA-based, while T-Mobile uses GSM technologies. However, Sprint is in the process of a major network upgrade and integration project dubbed “Network Vision” that it says will allow it to decommission 20,000 cell sites from Nextel’s legacy iDEN network. It is possible Sprint could integrate GSM support into Network Vision and accommodate T-Mobile devices.
(Read this briefing from Unison on Sprint’s Network Vision).

Another alternative being discussed by Deutsche Telekom executives is retaining the T-Mobile business, but selling off its 7000 cell towers.

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