Deutsche Telekom (DT) May Buy Sprint (S): A Brilliant Move

May 3, 2008 by Douglas A. McIntyre

Sprint (NYSE: S) may have found a buyer. The interested party is German phone giant Deutsche Telekom NYSE: DT). DT owns the fourth largest cellular carrier in the US. Sprint has the third largest network, but has struggled to keep subscribers since it bought rival Nextel. The M&A action would be brilliant for both companies.

Sprint’s shares are trading at $7.81 down from $25 less than two years ago. The firm has had financial troubles because of customers losses and has fallen well behind AT&T (T) and Verizon Wireless. Combining Sprint and T-Mobile would create a strong, third competitor in the US market. It would be the largest cell operator with 50 million customers from Sprint added to 28 million of its own.

Sprint has no solution to building out a 4G network that will allow it to remain competitive a less than a decade from now. Its plans to spend $5 billion on a national WiMax grid have been slowed and perhaps killed by the company’s financial and operational problems.

Reuters points out the the German government, which still owns a third of DT might not approve a deal. But, without one T-Mobile will never be a force in the US market and Sprint will languish in the third place spot while its better-funded and better-operated competitors pull further ahead.

Douglas A. McIntyre

Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)

Take the quiz below to get matched with a financial advisor today.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Take the retirement quiz right here.