T-Mobile and Sprint in merger talks

The two underdogs in the US carrier wars, T-Mobile and Sprint, may be joining forces. According to Bloomberg’s “people with knowledge of the matter”, Sprint and Deutsche Telekom have been in talks to make T-Mobile a significant stakeholder in a possible Sprint and T-Mobile merger. According to the sources, which have remained anonymous due to the private nature of the talks, the deal will hinge on an agreement on T-Mobile’s market valuation.

T-Mobile, despite a widely hailed rollout of their “4G” HSDPA+ network, is losing customers and revenue, while Sprint joins the top two networks, AT&T and Verizon, in posting gains.

According to Deutsche Telekom CFO Timotheus Hoettges, an alternative to a Sprint merger would be a possible spectrum purchase from Clearwire Corp., and an outright sale of the company is not in the cards. The company may be struggling, but not so much that would sell itself in entirety. Sprint owns a majority of Clearwire, and buying a significant amount of spectrum would just be another way to create a partnership between the two companies.

It will be interesting how the two companies would manage a merger, seeing as the technologies implemented are very different. Sprint is a CDMA carrier, while T-Mobile uses GSM; Sprint uses a Clearwire implementation of Wimax, while T-Mobile is using HSDPA+ to power its next-gen networks. In such a clash of technologies, the customer could possibly see a big win. The incompatibility between the various carrier technologies has been a barrier to inter-carrier competition, and breaking down those walls could definitely shake things up a bit.

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