T-Mobile should be sold to Sprint

T-Mobile is small and losing customers. It needs a partner.

By 247 wallst Nov 6, 2009 8:31AM

T-Mobile, the Deutsche Telekom (DT)-owned cellular carrier in America, is a failure and an abject one at that.


The firm lost 77,000 subscribers in the third quarter. Most analysts blame the attrition on a poor lineup of handset products and tremendous competition from Verizon Wireless (VZ) and AT&T (T). The two larger companies each added over 1 million customers in the quarter.

 

T-Mobile has 33.4 million customers in the U.S., and its chances of doing well as the No. 4 firm in its sector are fading to nothing.

 

T-Mobile’s only chance of being viable is if it is part of  a larger carrier. Sprint (S) needs it the most. It has slightly fewer than 50 million customers, making it smaller than AT&T and Verizon Wireless. Combined with T-Mobile, its subscriber count would be competitive with the other two companies.

 

Deutsche Telekom would do better owning a piece of Sprint as a proxy for its future success -- even if it had to put some cash into a deal for Sprint to take its T-Mobile customers.

 

The argument against a business combination is simple. Integrating two carrier platforms is complex.


The favorable reason for a transaction is that Sprint will be first to market with a new 4G-technology WiMax. That ultra-fast wireless system could pull in new customers for Sprint and T-Mobile.  Sprint already has the support of Clearwire (CLWR) and such tech giants as Intel (INTC).

 

T-Mobile has no future. WiMax does.

 

Top Stocks writer Douglas A. McIntyre is an editor at 24/7 Wall St.

 

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