Chief fuels talks of Deutsche Telekom takeover of Sprint Nextel By Kevin O'Brien Published: May 8, 2008 BERLIN: The chief executive of Deutsche Telekom, the largest European telecommunications company, fed speculation Thursday that it was considering a takeover bid for the U.S. mobile operator Sprint Nextel, saying the German company had an obligation to consider all acquisitions that would improve its bottom line. "We have said we can't rule out acquisitions which, when evaluated under strict financial and business criteria, would bring a clear profit and return on investment," the chief executive, René Obermann, said during an earnings conference call when asked whether Deutsche Telekom was considering a bid for Sprint Nextel. "That we must do and we will continue to do in the future." One analyst said Obermann's comments were confirmation that the German company, which owns the fourth-largest U.S. wireless operator, T-Mobile USA, was actively considering a bid for No. 3 Sprint Nextel, in a deal estimated to be worth as much as €33.7 billion, or $52 billion. T-Mobile USA and Sprint Nextel would together have 81 million customers, leapfrogging AT&T Wireless and Verizon Communications to become the largest mobile operator in the United States. A person briefed on the situation said Thursday that the German company and Sprint had been in talks about a possible takeover for two weeks. The companies are also approaching officials at the U.S. Federal Communications Commission to see if there may be any antitrust objections to the deal. "My gut feeling is Deutsche Telekom is considering a bid for Sprint Nextel," said Thomas Friedrich, an analyst in Munich at UniCredit Bank. "I think they should," he said. "For one thing, this would be an intramarket acquisition, a priority for Telekom, and would answer the question: What is the future of T-Mobile USA? It would be No. 1." Theo Kitz, an analyst at Merck Finck, a private bank in Munich, said T-Mobile would have difficulty integrating Sprint Nextel because the companies use different wireless networks. T-Mobile operates a GSM network in the United States, while Sprint operates a CDMA network and Nextel's network is based on iDEN, a technology developed by Motorola. "I hope they don't pursue this because I don't think the synergies would be easy," Kitz said. Friedrich said that the biggest question surrounding the deal would be whether U.S. regulators and Congress would allow Deutsche Telekom, which is 32 percent owned by the German government, to purchase Sprint Nextel. "That to me is the biggest unknown," he said. "I think the German government would do everything they can to support the deal." Under Obermann, who took over Deutsche Telekom in March 2007 after heading the T-Mobile unit, the company has expanded aggressively. It acquired the Dutch mobile business of France Télécom's Orange for €1.3 billion in October as well as a U.S. wireless operator, SunCom, for $2.4 billion in cash and assumed debt last September. The German company is currently negotiating with the Greek government to buy control of Hellenic Telecoms Organization, the country's former national phone monopoly. Obermann said talks with the Greek government, which began in January, have been constructive. Karl-Gerhard Eick, Deutsche Telekom's chief financial officer and deputy chief executive, said both sides were closer to an agreement but still disagreed over the price for management control. The company, known by its Greek acronym OTE, also owns fast-growing mobile businesses in Serbia, Romania, Macedonia, Albania and Bulgaria. "The talks have been constructive but have not been easy," Eick said. "Acquiring a national telecom operator is a topic that in all countries of the world, including Germany, is not easy. It is logical to conclude we have come closer to an agreement since the talks have continued. Otherwise we would have broken them off." As he has bought mobile phone businesses, Obermann has sold others, including two Deutsche Telekom Internet service providers, Club Internet in France and Ya.Com in Spain, and Media & Broadcast, a business that installed radio and TV broadcasting facilities. The sale of Media & Broadcast generated €500 million in profit, which helped Deutsche Telekom nearly double its profit recorded in the first quarter to €924 million from €465 million a year earlier, the company reported Thursday. Sales fell 3.1 percent to €15 billion in the quarter, from €15.5 billion a year earlier, as weakness in the dollar and the pound eroded Deutsche Telekom's euro-denominated revenue. Chief fuels talks of Deutsche Telekom takeover of Sprint Nextel - International Herald Tribune
If a real hybrid GSM/CDMA (both with American frequencies) phone with QChat capability could be made, this might make things work a bit easier for the "new" T-Mobile, if the merger occurs. Is this out of the realm of possibility? Would a phone like this be realistic? I wonder...
something like this should wait until the whole CDMA network us Rev A capable and QChat is online and fully operational......then a deadline should be set for iDEN shut down.......because with the rebanding the capacity of the towers has been going down.....i see it here in Reading every day.....people trying to get Direct Connect calls through and they wont go.......even calls that get dropped in perfectly good coverage.....no.......if we can get as far as a migration deadline then T-Mobile could buy Sprint......and the fact that Sprint and Clearwire have spun-off their WiMax ventures into a separate company (or will eventually) makes it an easier merger for T-Mobile but they will still get the revenue..... our only problem is that we've seen how easy it is to merge and then try to run two separate technologies on the same company......will T-Mobile do a beter job at it???
It all comes down to management. Sprint's management made more mistakes than they made successful decisions. This has been their undoing. I believe DT could do it. They've managed to make T-Mobile very successful here. Granted this would be an entirely different scenario than that, but with carefully planned and executed decisions, it could work. Though they really would have their work cut out for them.
That's correct. Sprint had no merging experience when they decided to jump on the most complex merger in the US, which is partly why they've failed. T-Mobile has some merging experience, but to takeover Sprint would be so much more complex that even for AT&T would be messy if they tried it. The only thing DT is thinking here is the $$$ numbers, and that's they only reason they are considering this possibility. I hope they really think of the consequences of this move and if they are capable of pulling it off. But my real hope is that if they decide to go for it, the feds deny it!
Yeah but remember that Sprint also made Sprint very sucessful until they bought Nextel. Sprint led the industry in subscriber growth for 14 consecutive quarters at one stretch in the late 90's early 2000's.
Sprint was small and unpopular......very tru and they grew but Nextel was more of a cancer than anything
Nextel was starting to disintegrate right before the merger (outdated technology, Boost Mobile oversold, etc) and I believe might have even covered that up a little so that they would be more appealing for someone like Sprint to want to buy. Sprint had no way of knowing how bad of shape they were headed for. Add to that a number of mistakes made along the way during the merger integration and that's why they are suffering today.
Main Problem with Sprint was lack of Synergy. Once the merger was announced Sprint needed to work with Motorola and build a tri-band phone (I don't think Motorola has or will do one now.) That way you can use either the PCS network or SMR network along with Cellular/PCS/SMR roaming if needed. If a phone like that came out about a few months after the merger, this would have helped retain many customers. I think Qchat has came a day late and a buck short for Sprint. I don't know any wireless tower engineers, so I can't comment on getting PCS/SMR equipment on same towers made more problems for Sprint or not. What I do know is that If T-Mobile does buy Sprint they better have iPCS under control. If they don't come to some agreement with T-Mobile, iPCS will probably file a lawsuit the day after the merger against T-Mobile and Iowa Wireless since they have networks in iPCS markets and iPCS exclusive rights in their franchised territory. Parts of the SMR (Nextel) network may have to be sold in Illinois because of iPCS contact with Sprint. issed: As of May 12th iPCS sues Sprint again. :deadhorse And this time for Clearwire deal. Well here is my :twocents: on the subject.
I hear you, larry. I'm not knocking Sprint in the least, specifically their past performance. It's just the mess that was made following the Nextel purchase. It seemed like all of the good decision making they had in the past, flew out the window. Since then, very little has gone right (or at least it seems that way on the outside). True, DT could make a mess of things too, but considering the fact that they're a much larger company than Sprint, maybe they can succeed where Sprint didn't. Who knows really. I'm sure DT is well aware of Sprint's troubles and how not to repeat the scenario if they make a play for them. I am giving DT the benefit of the doubt and I base this on their continued successful performance. It's just my opinion, though... I wouldn't be surprised if this is the case too...I'm sure Nextel execs were well aware of the sinking ship they were running.
so here is a related question...If DT takes over sprint...does that mean that Tmobile inherits the sponsorship for NASCAR?...If so then that (coming from a NASCAR Fan and tmobile employee) would be the coolest to me. I would love to see Dale Jr. winning the tmobile cup......man I think that's a piece of heaven right there!
Actually, it would be better for Virgin Mobile to sponsor NASCAR, that way the racers would aim to win the Virgin Cup...
I always assumed that the people running iPCS were more interested in lining their own pockets. If they sell then they are out of a job. It has never seemed to be a real well run company and Sprint's image in Michigan has suffered because of them.
i dont know.....it just seems dd that all the have is complaints when Sprint is just trying to make things better........iPCS sucks from the way people make it sound.....its not up to standard.....and everythign around it is evolving while it sits there......make it simple......shut down Nextel in their area.......dont roll out WiMax there......and just let them sit
The contract Nextel signed with NASCAR allowed for one name change during the 10 (?) year contract, and they've already used it. So I don't know what would happen.
The Sprint / Nextel merger was such a disaster... If they do buy them out then hopefully DT/Sprint can learn from their mistakes from the last merger.
Noone can set here and say what will happen just because sprint and nextel didnt work out. Maybe this could be a good thing
the probabilities of it being good or easy are extremely low.....i mean like at the situation.....something like that would be hopeless and even if it did work it would tak A LOT of work