Deutsche Telekom is apparently in talks with Sprint to sell its T-Mobile USA division, sources in the know tell Bloomberg.
The companies are supposedly far from finalizing a deal after on and off talks. The biggest roadblock, according to the sources, is Sprint and Deutsche Telekom&'s inability to agree on T-Mobile&'s valuation after it saw a major drop in profit and subscribers last quarter. If a deal is reached, Deutsche Telekom will land a major stake in the combined company.
Deutsche Telekom vaguely confirmed the fact that it&'s looking to sell off T-Mobile in an email statement to Bloomberg, saying that it may sell off all or part of the company. The company didn&'t mention who it was looking to sell its T-Mobile business to. A Sprint representative declined to comment to Bloomberg, and we&'re still awaiting an answer to our inquiries.
It&'s becoming increasingly difficult for both Sprint and T-Mobile &8212' the third- and fourth-largest carriers in the US, respectively &8212' to compete with AT&'T and Verizon. Those companies have much larger network footprints, and as of February they also both offer Apple&'s iPhone. By joining forces, Sprint and T-Mobile might find it easier to fend off competition.
But while it sounds good on paper, in practice a union between the companies would likely result in disaster. Sprint and T-Mobile&'s 3G networks are completely incompatible, and at the moment the companies are also pursuing completely different 4G strategies. T-Mobile is focusing on expanding its 3G network with HSPA+ technology, while Sprint is counting on its majority stake in Clearwire to deliver WiMAX 4G. Having the separate networks coexist under a single company sounds like a major headache, and it would be years before Sprint and T-Mobile subscribers could coexist on the same network.
Instead of a union between the companies, T-Mobile may consider buying wireless spectrum from Clearwire, two sources say. That would allow T-Mobile to either expand its network to regions where it doesn&'t have full coverage, or strengthen it in metropolitan areas where it has to compete with other carriers.
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Companies: deutsche telekom, sprint, T Mobile
Companies: deutsche telekom, sprint, T Mobile
Devindra Hardawar is VentureBeat's lead mobile writer and East Coast correspondent. He studied philosophy at Amherst College, worked in IT support for several years, and has been writing about technology since 2004. He now lives in Brooklyn, New York. You can reach him at devindra@venturebeat.com (all story pitches should also be sent to tips@venturebeat.com), and on Twitter at @Devindra.
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