After the Department of Justice said “no” to a merger with at&t late last year, T-Mobile was on its own with a $4 billion dollar cash infusion as part of the failed deal. At the time it said that it wanted to use its newfound cash to upgrade their network and capture more market share. Apparently, that fever didn’t last long as reports now say that T-Mobile is looking to merge yet again, this time with German mobile giant Deutsche Telekom.
Deutsche Telekom said that it wants to buy T-Mobile and merge it into its MetroPCS company. Deutsche CEO Rene Obermann said that while a complete sale might be difficult, given the previous problem with at&t, merging it with MetroPCS might be the best possiblity. It would definitely strengthen the German telecommunications giant foothold in the U.S. For T-Mobile, it could be a much needed lifeline.
Despite gaining the billions in cash, T-Mobile still has lost more than 500,000 customers. This is mainly because of its failure to secure the iPhone for its network. While they do offer service for unlocked iPhones, they do not yet have a contract with Apple. There are reports that they will be getting the iPhone 5 this fall, once their network is improved to be able to handle 3G and 4G phones. This could also be a huge risk, because Apple requires carriers to guarantee the sale of millions of phones, which means T-Mobile could be on the hook for billions of dollars if they don’t sell as many as they think they can. It’s obvious that they will feel much more comfortable if they are not on their own as a wireless carrier.
One thing is for sure, Deutsche Telekom is taking their time and doing their research. They are looking very closely at what went wrong with the previous merger attempt, and trying to avoid the same pitfalls. Once they gain the confidence and strategy needed, look for them to make their move. I would not surprised if this deal happens before the end of the year. T-Mobile might be depending on it – especially if they don’t get the iPhone in the fall.
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