T-Mobile & Cingular’s spectrum divorce


T-Mobile and Cingular are calling their joint venture off. The two had originally set-up this deal in 2001 when Cingular wanted to enter the New York market, and T-Mobile wanted to take California. After all now that Cingular has all the AT&T spectrum it needs, why would they need to do business with the Germans? T-Mobile will buy its network/spectrum in California & Nevada for $2.3 billion; probably a necessary transaction for T-Mobile, as it has no network presence in these two states.

Atlanta-based Cingular will also receive 10MHz of spectrum from T-Mobile in the New York BTA as part of the dissolution terms originally agreed in 2001. T-Mobile will obtain 10MHz of additional spectrum from Cingular in San Francisco, Sacramento and Las Vegas, as well an option to buy an additional 10 MHz in the Los Angeles and San Diego BTAs.

Investors seem to think this is a good deal for both parties. “They need access to these areas because the U.S. is what’s driving growth,” Friedrich Diel, who holds Deutsche Telekom shares among the $13 billion he helps manage at Frankfurt Trust Investment in Frankfurt, Germany, told Bloomberg News and added, “The investment makes sense.'”

According to Bloomberg, T-Mobile has 1.7 million customers in Nevada and California in the past two years and has about 14.3 million U.S. wireless users in total. While T-Mobile is looking to raise its subscribers to a total of 16 million by end of 2004, don’t count on it. I think we T-Mobile subscribers are going to go through dropped call hell over next few months. It would make many of us consider other options like AT&T or Cingular. Oh wait…. isn’t that what Cingular wants: stop T-Mobile’s growth in its tracks.

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