T-Mobile, the Deutsche Telekom-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 line-up of handset products and tremendous competition from Verizon Wireless (NYSE:VZ)(NYSE:VOD) and AT&T (NYSE:T). Each of the two larger companies added over one million customers in the quarter ending September 30.
T-Mobile has 33.4 million customers in the US 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 needs it the most. It has slightly less 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.
Deutsch 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 or Sprint and T-Mobile. Sprint already has the support of Clearwire (NASDAQ:CLWR) and tech giants including Intel (NASDAQ:INTC).
T-Mobile has no future. WiMax does.
Douglas A. McIntyre
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