So Many Reasons Why Deutsche Telekom Won't Buy Sprint

from the pin-drop dept

There's a rumor going around that Deutsche Telekom is thinking about buying Sprint. This is a bad idea for any number of reasons. Deutsche Telekom owns T-Mobile, which competes with Sprint, and which has certainly fallen way behind AT&T, Verizon Wireless and Sprint in terms of coverage and next generation network deployments. At the same time Sprint has definitely faced some tough times recently that have weighed heavily on the stock. So, you could see why Deutsche might initially think about it. T-Mobile is behind in the game, and merging with Sprint could (emphasis on could) jumpstart the business a bit. Plus, it's reasonable to think that Sprint may be undervalued these days. But... it's still a bad idea. T-Mobile and Sprint use totally different network technologies. Sprint is still dealing with the mess of trying to integrate Nextel's iDen system into its own CDMA-based system (which is part of the reason the company has been in trouble lately), and dumping a third totally incompatible technology into the mix doesn't seem wise. You could (again, emphasis on could) argue that Sprint now has some experience merging totally incompatible networks, but so far it's not exactly good experience. All in all, this seems like someone tossing out a suggestion. It's hard to see this as a legitimate possibility.
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Filed Under: integration, mergers, mobile networks
Companies: deutsche telekom, sprint, t-mobile

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  1. identicon
    Snidely, 6 May 2008 @ 3:39am

    Look below the surface

    The comments about the mess of technologies are right on, but there may be a deeper interest from DT. Contrary to what one of the posters said about frequency constraint, T-Mobile is constrained with a limited amount of 1900 MHz. Yes, they did get 1700 in the AWs auction, but that's for 3G and virtually no current devices support that standard. Sprint has a ton of 1900 MHz spectrum from its own holdings plus the swap proceeds that Nextel got by moving off the 700 Mhz band. Here's what I would do - buy Sprint just for the 1900 spectrum, spin off Xohm (not in DT's roadmap) and offer free handsets to Nextel subs who move to T-Mobile. Nextel customers already have SIM cards, so it's just a matter of the T-Mobile billing system recognizing the Nextel IMSI range (yes, I realize that is more difficult that it sounds). I would just allow Sprint to play out the CDMA Rev-A cards, but not invest in the network, pushing customers onto T-Mobile for 4G LTE. Still a gamble by DT, but it could have some potential if DT is really trying to challenge AT&T/Verizon and not be content to be the low-cost 4th player.

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