Strategic options fot T-Mobile

[Janus]

>>> the following is basically a repeat of what i've posted elsewhere, but I think it deserves a bit more discussion <<<

Having clearly passed Nextel, now T-Mobile is no. 4 behind the two giants Cingular and Verizon wireless, and the smaller Sprint with 16 million customers (without affiliates). The goal of T-Mobile USA should now to become the no. 3 carrier in the US and to bring its customer base to 20+ million. (lets forget about all the bullsh*t about DT selling T-Mobile USA to Nextel or even Vodafone - ridiculous!)

1. DT should buy Dobson with its 1,5 million customers. Dobson is already switching to GSM and has a market cap of only about 600 million $.

2. DT should buy Western Wireless with its 1,2 million customers in the US. WWCA has already overlaid parts of its network with GSM and is an important roaming partner for T-Mo. Plus its 1,1 million international customers would be nice for T-Mobile International (Ireland, Austria and Slovenia being the most important markets to gain from such a transaction). WWCA has a market cap of 2,3 billion $.

I think these two acquisitions are essential for T-Mo, bringing nearly 3 million customers and costing about 3 billion $ (much cheaper than 41 billion $ for 22 million customers ;-) )

If DT is very ambitious, they should go after US Cellular. USCC would be a bit more complicated, because it is CDMA. but this can be changed. USCC has about 4,3 million customers and a market cap of about 3,6 billion $. The question is whether TDS, which owns 82% of USCC would sell...

So for spending maybe 8 or 9 billion $ T-Mobile would gain about 7 million new customers bringing its total customer base to more than 20 million customers - bye bye Sprint. DT with its market cap of 90 billion $ should easily manage these deals.

Of course it would take some time to integrate the companies and their networks, but in the long-term (5-10 years) T-Mobile USA would esablish itself as the undisputed no. 3 in the US. As it is impossible to achieve that by organic growth only, DT will have to consider some acquisitions. (Buying EDGE and SUNCOM could be interesting as well, if they should be on sale)

The thing is that in maybe two or three years the customer growth in the wireless industry in the US will go down, since more and more people already own mobile phones, that's why it is so important to become big before that happens!!!

By the way I think that in a few years time, when T-Mo will have deployed WCDMA (UMTS) in the US (it is activating its german UMTS network soon) content will become much more important than it is now and T-Mobile will have a big advantage over for example Sprint, because with its nearly 100 million international customers (in a few years) it'll be able to make a lot of exclusive content deals (it already did with Lord of the Rings).

[bobolito]

You calculate and project these numbers over the years as if the other competitors were frozen dead. By the time T-Mobile can complete those "theoretical" deals Sprint would be far more than 20M customers.

Also, don't forget that right now there is one more carrier called AT&T Wireless and they are the current #3. Sprint is #4, not T-Mobile. Right now, T-Mobile is #5 and I don't see them moving from that spot anytime soon on their own, although they will automatically jump one more step when the AT&T/Cingular buyout completes. They have too much to catch up behind Sprint and DT already said they are not in acquisition mode at this time. They are trying to soften their debt. Although, I would like to see them buying out all those carriers you said and grow to approach Sprint's size, but it seems unlikely at this time. Next year, after the Cingular/AT&T buyout, Sprint will be #3 and T-Mobile #4. Although, unless AT&T can come out of coma, I am predicting that Sprint will takeover AT&T's 3rd place before the Cingular buyout completes leaving Sprint at #3, AT&T at #4 and T-Mobile at #5 for the rest of this year.

[jayc]

Originally posted by: bobolito You calculate and project these numbers over the years as if the other competitors were frozen dead. By the time T-Mobile can complete those "theoretical" deals Sprint would be far more than 20M customers. Also, don't forget that right now there is one more carrier called AT&T Wireless and they are the current #3. Sprint is #4, not T-Mobile. Right now, T-Mobile is #5 and I don't see them moving from that spot anytime soon on their own, although they will automatically jump one more step when the AT&T/Cingular buyout completes. They have too much to catch up behind Sprint and DT already said they are not in acquisition mode at this time. They are trying to soften their debt. Although, I would like to see them buying out all those carriers you said and grow to approach Sprint's size, but it seems unlikely at this time. Next year, after the Cingular/AT&T buyout, Sprint will be #3 and T-Mobile #4. Although, unless AT&T can come out of coma, I am predicting that Sprint will takeover AT&T's 3rd place before the Cingular buyout completes leaving Sprint at #3, AT&T at #4 and T-Mobile at #5 for the rest of this year.

I agree with bobolito... I don't imagine DT making any bold moves anytime soon.

[Matt]

While I agree that DT is not going to make a major purchase any time soon, buying out a few regional carriers over the course of a year or so would not have been eliminated by the previous comments by the company. We'll have a better idea on 10 March when DT releases its 2003 financials.

[bobolito]

Why do they take almost a full quarter to release the reports from the previous quarter? Every other carrier usually takes about a month.

[Delta]

How is T-Mobiles Churn? I know they have a lesser deposit than Sprint even, and they are picking up a lot of credit-challenged customers. Remember that bit Sprint in the smurf about 2-3 years ago.

[Matt]

Originally posted by: bobolito Why do they take almost a full quarter to release the reports from the previous quarter? Every other carrier usually takes about a month.

I don't know. They wait until they are up against the SEC filing deadline. Nextel just reported last Thursday, but it is still 2 weeks to DT....

[Matt]

Originally posted by: Delta3144 How is T-Mobiles Churn? I know they have a lesser deposit than Sprint even, and they are picking up a lot of credit-challenged customers. Remember that bit Sprint in the smurf about 2-3 years ago.

Their last official report for the first nine months of 2003 was 3.1%

[jayc]

Originally posted by: Matt Originally posted by: Delta3144 How is T-Mobiles Churn? I know they have a lesser deposit than Sprint even, and they are picking up a lot of credit-challenged customers. Remember that bit Sprint in the smurf about 2-3 years ago. Their last official report for the first nine months of 2003 was 3.1%

Yikes...