Summary:

T-Mobile’s latest quarterly earnings aren’t pretty, and there’s a chance its acquisition by AT&T won’t survive the federal scrutiny that begins this week with congressional hearings. So what should the nation’s fourth-largest carrier do if the deal is scuttled? Here are a few ideas.

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As one mobile pundit wrote this week, AT&T may have arrived in the nick of time for T-Mobile USA. The nation’s fourth-largest carrier posted its quarterly earnings last week, and the numbers weren’t pretty. T-Mobile suffered a net loss of 99,000 subscribers during the latest quarter, and its net income fell to $135 million, down dramatically from $362 million during the first quarter of 2010.

So it’s easy to see why Deutsche Telekom is looking to spin off its U.S. service provider for $39 billion. As we’ve said before, everybody except AT&T and T-Mobile loses if federal regulators allow the deal to go through. So while we believe the feds will eventually give their blessing after extracting some major concessions from AT&T, there’s always the chance the acquisition won’t survive the scrutiny it’s sure to undergo by the Department of Justice, the Federal Communications and Congress.

In my weekly column at GigaOM Pro, I discuss some strategies Deutsche Telekom should consider if the deal is scuttled.

  1. Produce a hit handset. That’s a simple-minded suggestion, to be sure, and it is much easier said than done (especially since Apple is extremely unlikely to produce a T-Mobile iPhone anytime soon). But T-Mobile already has a top-notch customer service operation and a surprisingly fast network, so if it can team with a manufacturer to offer a must-have, exclusive handset — and then if it backs the device with a big-budget marketing campaign — it could lessen the gap with the big boys.
  2. Submit to Google. Verizon Wireless and AT&T have cautiously kept Google at arm’s length, but Sprint has taken the opposite tack by fully embracing Google Voice, enabling users to call or text from Gmail and to use Google’s own voicemail system. T-Mobile has a deep history with Google – remember that it launched the first Android handset in October 2008 – and it could differentiate itself by doing everything it can to become the unofficial Google operator.
  3. Find another buyer or merger partner. This is the most likely scenario if the AT&T takeover fails, as there are several potential suitors for whom T-Mobile might be a good fit. A cable TV provider like Comcast or Time Warner could be interested, for instance, although both have ties to Clearwire and Sprint.

It’s worth noting that rejection of the acquisition wouldn’t be entirely bad news for Deutsche Telekom, which would receive $3 billion in cash as well as some spectrum from AT&T under that scenario. Those assets – coupled with a new strategy – could help it compete in a market where AT&T and Verizon increasingly dominate. For more ideas on how that could happen, please see my weekly column at GigaOM Pro.

Image courtesy Flickr user Mavis.

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