Here we go again. The rumor mill is churning once again about a possible Sprint – T-Mobile merger as Bloomberg reports that Sprint and Deutsche Telekom have begun discussing offloading the US holdings. The terms of the deal seem to be that Sprint will purchase T-Mobile from Deutsche Telekom by giving Deutsche, Sprint ownership (possibly as much as 50%). This to me sounds more like Deutsche is buying a large stake in Sprint by using T-Mobile assets rather than cash.
Sprint declined to comment on the possible merger but Deutsche Telekom has said any option is on the table, perhaps as evidence of their desperation to offload a losing project. The truth is, as Bloomberg said, Deutsche is selling from a weak position. T-Mobile has been hemorrhaging customers, its network has consistently been found to suck the most, and its earnings have been suffering. While doing much better, Sprint Nextel isn’t exactly a picture of health either, and a merger between two turds will likely yield little more than a larger turd. This isn’t even taking into account the danger of the already stiflingly frustrating big 4 turning into the big 3. Because, you know, oligopolies always work out for consumers in the end…
*Note that this is only for T-Mobile USA. The T-Mobile brand is doing quite a bit better outside the US.
Source: Bloomberg Businessweek