DT to Seek U.S. Partners for T-Mobile USA

Posted by: Olga Kharif on November 20, 2009

T-Mobile USA’s parent Deutsche Telekom is looking for U.S. partners to help fund the U.S. wireless carrier’s network build-out, according to a report from Reuters and a German newspaper. Potential partners may include Clearwire, MetroPCS or Leap, according to the report.

Neither of these partners may have the funds for such a deal, however. Clearwire has just raised more than $1.5 billion in funding; but that’s less than half of what it needs for its own network build-out through 2013, according to analysts. MetroPCS and Leap are still small companies, struggling to keep growing amidst rising competition. MetroPCS’s subscriber additions in the third quarter were less than a third of what they were a year ago.

Yes, it is possible that all these struggling, smaller competitors will decide to band together and to fund one network, to be used by all — say, Clearwire’s. Most of them address a different market segment, so they won’t compete with each other too much: T-Mobile goes after the hip, young crowd (though it’s also pursuing prepaid customers). Clearwire offers mobile broadband services for laptops. MetroPCS and Leap have made their names on prepaid wireless plans.

But I would argue that what T-Mobile USA needs is to be paired up with a cash-rich, well-to-do giant, instead. After all, you put a bunch of struggling companies together, and you often end up with a large struggling company.

It seems to me that DT should, instead, look in a different direction — to AT&T, for example. AT&T is healthy and has the funds to help T-Mobile out. It also currently uses the same type of networking equipment as T-Mobile, and could help T-Mobile migrate to next-generation technology more smoothly. While such an alliance could, potentially, raise the anti-trust flag, a deal could, perhaps, be structured in such a way as to overcome such concerns.

Reader Comments

John Gillerman

November 20, 2009 5:03 PM

Why would T-Mobile USA want to partner with a larger direct competitor such as AT&T? AT&T and T-Mobile would seem to both want to have the option of selling mobile applications. A supplier such as Clearwire, who is more focused on "pipes", or a niche player such as MetroPCS would seem to be a better fit. While Clearwire or a niche player may not as much cash, the risk seems much lower.

Matthew Dodson

November 20, 2009 5:06 PM

Saying that DT cooperating with AT&T to build out its network may raise anti-trust concerns is like saying that driving off a cliff may be hazardous to your health.

Jeremy

November 21, 2009 5:53 PM

The idea of only having Verizon and AT&T should scare everyone. At no time should either Sprint or T-Mobile be allowed to be bought or become a partner with either of the giants. Talk about eliminating competition.

j

November 22, 2009 9:45 AM

There you go ATT partner with T Mo to gain more spectrum and crush big red

ottoteller

November 23, 2009 5:26 PM

What T-mobile really ought to do is pay attention to customer service. Out of contract by two years, I was told I would have to switch to electronic invoicing or pay extra. Okay. Fair enough. I received one bill and then they stopped coming altogether. Tried unsuccessfully to get someone on the phone or to respond in a chat window on their site. Finally gave up, bought a Tracfone, and ported my number. Like most large corps, they are good until you need to change something--anything--and then it hits the fan. I wish them luck. They need it.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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