A Marriage of Convenience for Sprint, T-Mobile?
Sprint Nextel and Deutsche Telecom are now talking over a future merger between the third and fourth largest wireless carriers by subscribers in the U.S., namely Sprint and T-Mobile USA, a subsidiary of Deutsche Telecom in the USA.
Yet, according to people that are close to the matter, the chances of such a merger taking place are diminishing when it comes to discussing issues of determining ownership and leadership of a combined company, and figuring out how a transaction might be financed. This all in addition to rumors of Sprint wanting to own more than half of a combined Sprint & T-Mobile USA and T-Mobile’s valuation after it faced major drops in profit and subscribers in Q4 2010.
This is a prospective important step for Sprint that in 2005 acquired Nextel Communications, an operation that did not turn out to be very wise in financial terms, making the company somehow reluctant to making a similar step now.
Many see a great opportunity for both Sprint & T-Mobile USA after joining forces to compete with giants AT&T and Verizon, that not only benefit from a strong position in the market, but also having added Apple products to their offering, giving the two companies a significant advantage. Analysts see this future merger as somehow erroneous given the fact that ‘Sprint and T-Mobile’s 3G networks are completely incompatible, and at the moment the companies are also pursuing completely different 4G strategies.’
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