T-Mobile's owner might consider buying Sprint, say analysts
Much beleaguered Sprint Nextel might get bought out by Deutsche Telekom, the owner of major wireless competitor T-Mobile, according to an analyst report.
In a report issued yesterday, Merrill Lynch analysts cited industry pricing as the reason why Deutsche Telekom -- the world's sixth largest telecom carrier -- might acquire Sprint Nextel, despite Sprint's operational difficulties and sinking position in the US mobile market.
The analysts speculated that, due to these very problems, Sprint looks likely to launch a price war that could impactly adversely on the US arm of T-Mobile, widely regarded as the "low-cost alternative" among the top five US wireless carriers.
"In such a price war scenario, we think T-Mobile would face the most pressure, and Deutsche Telekom would see the increased urgency to drive market repair," according to the report.
But Merrill Lynch also said it isn't aware of any talks between Deutsche Telekom and Sprint around an acquisition -- only that the former company is considering the possibility.
Sprint has already moved to lower pricing by adding more voice and data calling capabilities last week to its existing $99.99 per month "Simply Everything" plan.
Yet Sprint's own earlier acquisition of competitor Nextel seems to have played heavily into Sprint's own current operational and financial woes. As many observers see it, Sprint has been overburdened by trying to manage its own long-time cellular network, together with Nextel's network and the emerging Xohm 4G broadband WiMAX network.
A buyout may be a particular bargain right now in light of Sprint's falling share prices and the overall weakness of the US dollar, according to the analysts' report.