Sprint and T-Mobile May Merge

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Deutsche Telekom (DT), who owns T-Mobile USA, is reportedly considering making a buyout offer for Sprint. This would create a carrier with nearly as many subscribers as AT&T.

If it does make the offer, DT would likely have to pay at least $11 billion for Sprint. Still, the German-based telecom is apparently considering the deal because T-Mobile USA is struggling, while the parent company is doing well.

And Sprint’s Board of Directors might be interested. This carrier has been struggling in recent years, and is in third place, well behind Verizon and AT&T.

The combined company would be roughly the size of AT&T, but still smaller than Verizon. 

GSM, HSDA, LTE vs. CDMA, EV-DO, WiMAX
A stumbling block in any merger of these two companies is the fact that they use incompatible wireless networking standards. T-Mobile and DT use GSM, while Sprint uses CDMA. Getting a merged company onto a single standard would take several years.

Sprint itself is an example of how this can go wrong. Several years ago it bought Nextel, which used yet a third incompatible networking standard iDEN. Many of Nextel’s customers didn’t become Sprint customers, but chose to switch providers instead.

And the problem isn’t expected to get easier. DT and T-Mobile USA are committed to moving to the 4G standard LTE, while Sprint has already begun the move to a different 4G standard, WiMAX.

This unconfirmed report comes on the heels of DT’s announcement that its T-Mobile UK subsidiary is going to work merge with one of its top rivals, France Telecom’s Orange.

Source: Wall Street Journal

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