According to reports, German telecommunications powerhouse Deutsche Telecom AG (ETR:DTE, news, filings) is considering an IPO or even a spinoff of its T-Mobile USA unit. The idea would be to provide the unit with new funding with which it could reverse its flagging fortunes. One suggestion is that they offer up some 20% of the company, which could raise some $4B for a 4G network buildout. No doubt that would make the equipment providers very happy, since four national 4G network builds in progress over the next couple of years would be quite a boon.
I’m not sure why it would surprise anyone that DT, because while they haven’t said so openly they have clearly had all options on the table for several quarters now. Reports have had them considering all sorts of possibilities – from a sale to Sprint on to a purchase of MetroPCS or Leap Wireless all the way to some kind of partnership with Clearwire. I’m fairly sure there are other less even likely alternatives that have been on the table as well.
But just because they are considering it doesn’t mean they will do it. It’s not as if DT is hurting for money – they haven’t put money behind a T-Mobile USA expansion because to put it bluntly they’re afraid it won’t work. That doesn’t change when the money comes from an IPO. A spinoff would make the problem go away for DT itself but it doesn’t really solve anything either. What they need is something that changes the game in their favor.
The other day Kevin Fitchard over on ConnectedPlanetOnline opined about Leap Wireless (NASDAQ:LEAP, news, filings) and MetroPCS (NYSE:PCS, news, filings) getting on with what everyone knows they’re fated to do. But perhaps a threesome with TMobile USA would make things a bit more interesting? Yes, I know there are incompatabilities between CDMA and GSM ther, but I don’t mean a straight M&A and immediate integration. Surely the financial whiz-kids can come up with a way the three could move forward together on a unified LTE push and eventually transform into a real competitor to their larger brethren in a few years.
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