Blog Post

Why Comcast & Not T-Mobile Should Buy Sprint

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Sprint LogoShares of Sprint got a boost this morning after the Sunday Telegraph reported T-Mobile parent Deutsche Telekom (s dt) AG may acquire the carrier and merge it with its own T-Mobile USA. But a tie-up with Comcast (s cmsca) would be a better fit for the beleaguered carrier.

Just a week after Deutsche Telekom announced plans to merge T-Mobile UK with Orange, the company reportedly called in banking advisers to study a potential takeover of the American operator, which has a market capitalization of $12.45 billion. But Deutsche Telekom’s move may serve as a catalyst for Comcast’s entry into wireless. The nation’s largest cable company has been hoarding cash since its failed $54 billion bid to take over Disney in 2004, amassing a bankroll of $4 billion in cash and short-term investments and leading some analysts to speculate it has another big-budget acquisition in mind. And we’ve known Comcast is serious about mobile since last year’s hire of Dave Williams, former CTO of Telefonica O2 Europe.

Sprint (s s) is attractive in a number of ways. It’s offloaded its network-management operations to Ericsson, eliminating the need for any buyer to deal with the hassle of operating the infrastructure. It’s also building out the WiMAX technology that Comcast is already backing, and the carrier’s portfolio of devices has vastly improved with hardware such as the Palm Pre and Pixie and the upcoming Android-based Hero. And Sprint’s wireline businesses could offer Comcast an advantage when it comes to access and peering agreements for middle mile access.

However, analysts say a Deutsche Telekom tie-up could be a huge lift for T-Mobile USA, largely by removing the threat of Boost Mobile, a Sprint subsidiary that has gained traction by targeting young, data-hungry users with prepaid services. The rumored merger would result in a carrier with 78 million-plus customers, rivaling both Verizon Wireless (s VZ) and AT&T (s T).

But the move would also prove a logistical nightmare, requiring the integration of T-Mobile’s GSM network with Sprint’s CDMA and iDEN infrastructures — all of which are incompatible. And the deal might have a tough time gaining approval of U.S. regulators at a time when the FCC seems increasingly eager to promote competition in mobile.

Both Deutsche Telekom and Comcast have long been rumored to be mulling an acquisition of Sprint. But if Comcast is going to finally step up and pursue a quadruple play, the time is now.

14 Responses to “Why Comcast & Not T-Mobile Should Buy Sprint”

  1. Comcast / Sprint could make a run at plenty of frustrated AT&T and Verizon customers who have no home cell coverage with femtocells or Wi-Fi phones. AT&T and Verizon are most vulnerable in areas where femtocells are required to get coverage in the home. 50% of the U.S.

    • Yup
      Comcast is the natural suitor . They don’t have wireless.
      They have cable, internet, VOIP with SPRINT joining them, wow, thats a one big company which can go toe to toe with Verizon.
      ATT is doomed , Steve iPhone Jobs is keeping at alive.

  2. Since I had read elsewhere that Clearwire customers in the northwest US were unhappy with the Comcast-backed wireless reception/use, it makes me wonder exactly who is backing Clearwire and how much of an alternative to cable, as well as the phone companies, it really is.

    Also, from what Danielle said earlier, what effect will HSPA have on GSM phones? I just bought myTouch. Will it become obsolete?

  3. Ack. Rumor has it that Sprint is finally overcoming its reputation for bad customer service – nothing would reverse that quicker than being owned by Comcast.

    Seriously though, Sprint has made some good moves lately – I hope that if someone does acquire them, it doesn’t reverse that trend.

  4. Jacob Varghese

    Logistically, this would be a nightmare for T-mobile especially considering Sprint’s longterm contract with Ericcson and ownership stake in Clearwire.

    LTE vs WiMax is more important of a difference than GSM vs CDMA.

    Duetsche Telekom is committed to LTE.

  5. I highly doubt that T-Mobile would have to (or even want to) integrate their GSM network with Sprint’s CDMA network. That would be insane.

    Most likely what would happen would be that they start selling HSPA capable products and services to existing CDMA clentele wooing them over while increasing coverage and capacity.

    Remember, GSM is older technology. A lot of blog sites keep referencing that T-Mobile would convert Sprint’s CDMA network to GSM. That make no sense when they are currently migrating their users to HSPA capable handsets themselves.