Deutsche Telekom may be looking to beef up its T-Mobile USA wireless brand with a takeover of troubled Sprint Nextel Corp. (NYSE: S).
Although Sprint Nextel has made strides in trying to keep valuable contract wireless customers, it continues to lose hundreds of thousands of them per quarter. The one bright spot: it's adding hundreds of thousands of less-profitable prepaid wireless customers at the same time through its Boost Mobile prepaid brand.
Still, Sprint Nextel shares are depressed ($4.14 as of Monday morning), and a takeover would be a meager $10 billion or so. Compare that with the $30 billion Sprint paid for Nextel in 2005 (its biggest corporate mistake ever), and the combined Sprint Nextel would make a great fit for Deutsche Telekom. Sprint Nextel has wireless licenses spanning the U.S. that make a $10 billion price tag awfully attractive.
This isn't the first time Deutsche Telekom has been rumored to want more footing in the U.S. market. The same technical challenges remain: Deutsche Telekom's T-Mobile USA uses the GSM wireless standard, and Sprint Nextel alone uses two completely incompatible wireless standards (CDMA and iDEN).
A U.S. carrier using three different technical environments to run a national wireless network sounds like a nightmare before it even begins. Verizon Wireless and AT&T Inc. (NYSE: T) use a single standard on their respective nationwide networks. Still, with all the challenges, a small price tag for the third-largest U.S. wireless carrier with just under 50 million customers is very tempting.
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