T-Mobile USA Sale Rumored
For years, Deutsche Telekom has denied publicly that they would sell the U.S. arm of its worldwide T-Mobile phone operation. However, fund managers have told the press that the company plans to make a decision to sell the unit within the next several months.
At issue is the costs related with an eventual upgrade to 3G. The company is unsure whether or not it wants to spend the $5 to $10 billion that it is expected to cost to bring these data services to customers.
However, investors are skeptical as to whether a buyer could be lined up for the unit. Possible buyers for the unit could be mobile phone operator Vodafone, who owns 45 percent of Verizon Wireless, and uses GSM technology like T-Mobile. However, Vodafone representatives indicated the company has no interest in T-Mobile.
Analysts have questioned the wisdom of selling a growth engine for the company. "[T-Mobile CEO] Ricke can kiss good-bye to his goal to be the fastest-growing European integrated telecoms operator if he sells T-Mobile USA," said one fund manager. "There is nothing he could buy that would deliver growth on the same scale."
In any case, with only four major wireless providers left and T-Mobile the smallest of them all by far, the company must increase spending in order to keep pace. So a decision needs to be made soon, analysts say. "[It must] either commit to this, or look to divest itself of the asset at the best price," Rich Nespola, chief executive at U.S. consultancy Management Network Group told Reuters.