The unraveling of the AT&T merger with T-Mobile was not entirely bad for the fourth largest mobile carrier in the US. They get $3 billion. It isn’t enough to keep them afloat for more than a year or two, but it does buy them time to find someone else. It gives them time to formulate a plan-B.
Unfortunately, they don’t know what plan-B is for them. It was shortsighted of Deutsche Telekom to go into this without a plan-B. Putting all of one’s eggs in a single basket makes no sense when so much as at stake. The company has to regroup quickly.
First, they have to make themselves valid by improving the infrastructure. AT&T had it already so there was no need to focus on building up. That, of course, didn’t work out.
“In the long term, we need more spectrum and network capacity,” said Deutsche Telekom Chief Executive Rene Obermann. “We are working on that. But we will not speculate about any inorganic steps or deals.”
They might not be willing to speculate but the rest of us will. We have to. The company thinking “long term” by improving their own infrastructure is not really thinking at all. If anything, they are simply trying to increase their own value by such actions.
“Stabilization is the first step and then it’s about finding a new partner in the medium term,” said Wolfgang Specht, an analyst at WestLB AG in Dusseldorf. “In the long run a standalone strategy seems impossible. Everything from here on is only a second-best solution.”
Who can fly in and be the valid second-best solution? Here are some possibilities:
It’s hard to imagine a situation in which the government would block one carrier from buying T-Mobile only to allow another later, but if they would be willing to do it, Sprint is the only option. It would be a last resort; the goal is to have 4 major carriers, not 3. Sprint, being a distant third behind AT&T and Verizon, would be an alternative better than losing the T-Mobile option altogether.
There have been technical incompatibilities that have prevented the two from working together in the past, but this has become less of a challenge with recent upgrades to the infrastructure and software.
Is this a likely scenario? No. Is it feasible? Yes. Is it desirable? To current Sprint customers, probably not as T-Mobile brings little in the way of value other than spectrum. It has a weak 4G network, and therein lies the more likely scenario: a partnership between the two companies that keeps them separate but that gives them strength against AT&T and Verizon. In this scenario, there would still need to be a buyer for T-Mobile, which could be…
Dish Network Corp
Dish is in an odd position. On one side, it’s being named as a possible acquisition target for AT&T. On the other end, they are a possible buyer or partner with T-Mobile. At the center of their situation is billions of dollars worth of wireless spectrum they acquired earlier this year as part of deals for bankrupt DBSD North America Inc.
For AT&T, they represent a consolation prize. Shares jumped 9.1% yesterday behind those rumors.
Buying or partnering with T-Mobile is an option for putting their spectrum assets to work because of the relative weakness the company has exposed. It would mean jumping into one of the most competitive industries out there and starting from way behind the leaders, but if the deal is good enough, why not?
Many look at their involvement as a waiting game. Their value in AT&T or Verizon’s eyes will only go up as time passes while T-Mobile’s goes down. If they wait too long or decide to get gobbled up rather than being the gobbler, the long-shot companies might step in grab T-Mobile for the sheer value. Those long-shot companies include…
Google, Amazon, and the other usual suspects
Google is already partially in the mobile game from every angle other than carrier. They bought Motorola Mobility. They have Android. Why not complete the set?
Amazon is a company that’s always looking for value and T-Mobile at a low-enough price might be enough to get them interested.
Facebook has cash and nowhere to spend it. They’ve expressed a desire to get into the mobile business and their relationship with Skype puts them in a position to put a T-Mobile to good use.
Apple, Sony, and Microsoft have to be in the conversation because they always are despite the fact that it simply won’t happen.
Who will buy T-Mobile? Someone has to. The company is unable to stand alone. In the end, it will come down to value. AT&T was able to offer more than the company was worth for market-share needs, but nobody else other than Verizon (which would get blocked faster than AT&T was) would have an interest in a $39 billion T-Mobile.
The option that nobody is talking about is the government itself. An auto-industry-style bailout would be required before the company would be allowed to fail simply because the repercussions would rock the industry as a whole. Thousands of jobs, sold off infrastructure, a “meddling government” tag that Washington can’t afford; if nobody comes in and saves T-Mobile, we could conceivably see a government-owned entity.
If the government took control of a portion of mobile, the conspiracy theorists would go insane.