If the AT&T deal fails, what’s next for T-Mobile?

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AT&T’s $39 billion bid for T-Mobile USA isn’t over with the Department of Justice’s decision to file suit against the merger. But it raises a lot of new uncertainty around the deal and the possibility that it might not go through at all.

So what happens to T-Mo if AT&T’s can’t buy it? Here are some thoughts on possible outcomes:

T-Mobile goes it alone. With the infusion of $3 billion in a break-up fee from AT&T as well as added spectrum, T-Mobile might give it another go as a standalone network and upgrade to LTE. It’s unclear what spectrum would be handed over and if it would be enough to build out an LTE network. But Reuters has previously reported that the spectrum would be worth $2 billion, while a roaming agreement for T-Mobile would also be valued at $1 billion. It’s unclear if all that would be enough for Deutsche Telekom to change its mind. T-Mobile’s parent company sounded pretty disappointed that the $39 billion deal didn’t go through, but the break-up fee could help keep T-Mobile in the game for longer now.

Sprint could make a play to merge with T-Mobile. It would have to scrounge up a lot of cash, arguably more than it has. The company has about $4 billion in cash on hand and $900 million in borrowing capacity, but it faces a $2.3 billion debt due by March and a network-modernization project that will cost at least $4 billion over the next three to five years. But if it could get the deal done, Sprint could move from a distant third into a respectable rival at the top of the cellular market. The language of the DOJ suit suggests that Sprint may face similar opposition if it tries to go after T-Mobile but even a combined Sprint/T-Mobile wouldn’t rise to the level of a No. 2 carrier. Of course, Sprint would still have to figure out its spectrum issues with LightSquared and Clearwire. And after the nightmare of merging with Nextel, the hefty integration work for Sprint, which uses CDMA as compared to T-Mobile’s GSM technology, could also kill any deal.

T-Mobile could end up being an appealing pick-up for one or more cable companies. The cable companies have come together in the past with Clearwire and Sprint to offer wireless service, and they could band together again to buy T-Mobile. This would give them a more credible wireless play as traditional telcos like AT&T and Verizon move into the TV business. And they’ve got some wireless spectrum assets of their own. It’s still a tall order, but it makes sense if the cable companies can come to an agreement.

A private equity firm could look at taking on T-Mobile. A PE firm could try to run T-Mo themselves, perhaps for a few years while they search for a buyer. Or they could look at selling off the assets if no single buyer emerges. Again, this is another stretch, but there may be some firms that think they could make T-Mobile into a winner, or at least more valuable for sale.

Deutsche Telekom could sell off T-Mobile in parts. DT could just cut out the private equity middleman and start selling off the pieces of T-Mobile. It probably wouldn’t fetch the $39 billion AT&T was willing to shell out, but it could still be a lucrative exit out of the American market. It would probably depend on how much interest DT receives in T-Mobile from any other suitors.

We’ll be talking more about the carrier situation at our GigaOM Mobilize Conference on Sept. 26-27 in San Francisco.

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