To Sell or Not To Sell T-Mobile USA?

Wall Street Journal is reporting that Deutsche Telekom is contemplating selling off its T-Mobile USA business, which could get as much as $30 billion from potential buyers that could include Vodafone. World’s largest wireless operator does not have a US presence though it has a partnership arrangement with Verizon Wireless. Vodafone people denied that they were even remotely interested.

The Journal says that a certain segment of DT executives believe that by selling off T-Mobile USA, T-Mobile Europe could get out of a pickle – it won’t have to spend $10 billion or so to upgrade the US networks to 3G technologies. They could get $30 billion – which is $29.999 billion for Catherine Zeta Jones and rest for the telecom assets. (Mind you, the Germans paid around $45 billion for a little company called VoiceStream to get into the US market. And they call Japanese crazy spenders!)

The money from the sale could be used to fill out holes in the European networks, buy more market share in the old continent, and perhaps expand eastward into Eastern Europe. In other words circle the wagons. The other camp sees T-Mobile USA as an engine of growth, which despite being a distant fourth is doing relatively well and adding subscribers at the rate of about one million a quarter. That’s not something to sneeze at.

I do agree whatever needs to happen, it has to happen now. So far the cheap voice prices and great customer service have helped the company outwit their bigger, somewhat lumbering rivals. I think they have put the lipstick on the pig (and no that doesn’t mean the lovely CZJ.) Once the folks get a taste of 3G in the form of EVDO or even UMTS (when that happens), the defection away from T-Mobile would be rapid. The WiFi as a 3G-option strategy doesn’t have long term legs, for WiFi is only part of the solution. WiMAX is not going to be the fix, not in the near term anyway.

If this happens, it will be yet another sesimic shift in the wireless landscape in the US which has undergone a sea change in the US in past year or so. Cingular snapped up AT&T Wireless while Sprint snapped up Nextel. We shall wait and see. Germans expect to make a decision by end of the year.
More @ Wall Street Journal.

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