Clearwire latest partner mooted for T-Mobile USA
Published: 24 September, 2009
READ MORE: M&A | Clearwire | T-Mobile | Deutsche Telekom | MVNO | WiMAX
Ever since Deutsche Telekom agreed to put its T-Mobile UK arm into a joint venture with Orange, seeking to gain market share and new capacity, there has been intense speculation that it would make a similar move in the US. There, TMo is well behind its main rivals in terms of 3G coverage and 4G plans, and has been linked over the past couple of weeks with Sprint Nextel, MetroPCS and now Clearwire.
With Verizon Wireless and AT&T increasingly dominant, especially in the higher value data and postpaid markets, TMo and Sprint have a hard challenge to remain relevant. This has repeatedly led analysts to wonder whether they might join forces, despite the difficulties of gaining real economies from integrating their incompatible networks (all four of them if you include iDEN and the Sprint majority stake in Clearwire's WiMAX). However, the Clearwire element may be the real attraction to the German owned operator, and the latest speculation is that TMo is seeking to join the start-up's list of MVNOs (also including Sprint and three cablecos).
Bloomberg cites "people familiar with the matter" in reporting TMo talks with Clearwire and also MetroPCS, to increase its current capacity and tie its colors to the mast of an operator with a more advanced 4G plan than its own (MetroPCS aims to start building LTE as early as the end of 2010, whereas TMo is focusing on a longer HSPA+ expansion, with LTE at an unspecified future date).
Most urgently, TMo is looking at the most cost effective way of building a nationwide high speed network in order keep pace with the big two, especially as it needs to balance a shift to low margin prepaid plans with a better ability to support new broadband and web services.
This could lead it to Clearwire, which is building a WiMAX fat pipe in its plentiful spectrum specifically to support new business models including open access and multiple MVNOs. The reports, echoing Sprint's own recent comments, deny that there was ever a plan for TMo and Sprint to create a direct joint venture, despite much talk last week.
A TMo deal with Clearwire could, of course, solve the question of additional cash for the start-up, with parent Deutsche Telekom providing funding (some freed up by its UK joint venture with Orange) in return for access to the most advanced mobile network in the US. Clearwire is believed to need an additional $2bn to complete its roll-out schedule for the coming year (though Sprint CEO Dan Hesse recently said it would be ready to fill a funding gap if that arose).
There are clear synergies for TMo, and Clearwire has sufficient capacity in its key markets to support an additional MVNO without hurting the existing four - but the presence of Sprint as majority stakeholder would be a complicating factor if there is to be no direct alliance between the US' third and fourth cellcos.
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