With AT&T Out Of The Picture, Where Does T-Mobile Go Now?

I know there is a celebratory aura going around in the T-Mobile world today and employees especially are breathing sighs of relief. Here at TmoNews we’re definitely glad to see AT&T and their proposed takeover of T-Mobile go down the toilet. Now we turn our attention to the fact that T-Mobile still needs a plan and their options are plentiful, with most of them already well-known having been widely discussed as alternatives while AT&T was playing out. It remains to be seen which options, if any, are the most likely or the most plausible but we won’t ignore the fact that T-Mobile still has a bumpy road ahead even as we celebrate the removal of AT&T as a buyer.

With the deal done, AT&T has said they will give Deutsche Telekom the agreed upon $3 billion in cash and $1 billion in spectrum for the break-up fee. Let us emphasize the fact that money is going to Deutsche Telekom and nothing has been shown that says they are under any obligation to spend that money on their US operations. In plain words, they can do whatever they want with the cash. Assuming they did use that money in the US, the breakup fee could give Deutsche Telekom some incentive inside the US market they have seemingly sworn off.

Moving on, let’s be clear about one thing. T-Mobile needs the iPhone. We’re well beyond the point where the iPhone would attract a new customer base for T-Mobile, however it would at the very least boost their smartphone lineup to include all options for all people. Now that the merger is out of the way, T-Mobile needs to broker a deal with Apple, period. T-Mobile has thrown their lot in with Android and, in some sense, it’s paid off. That doesn’t ignore the idea that T-Mobile appears weak without the iPhone in their lineup. First, the company must cut off any reason which customers might choose to abandon T-Mobile and one of the major reasons remains the iPhone competition.

The iPhone aside, what can Deutsche Telekom do? One option is to put that $3 billion to work on potential acquisitions of its own. T-Mobile could expand its prepaid presence, the one area where it is still grabbing customers by the truckload, by making a play for MetroPCS or Leap Wireless. However, both of these deals would have their own set of issues as incompatible technologies would make for a difficult transition. Leap began to see serious rumors about a potential T-Mobile hookup as soon as the AT&T deal started going south.

Another possible scenario is that Deutsche Telekom uses the breakup fee and goes after more spectrum. It’s no secret that T-Mobile needs more spectrum to rollout 4G LTE and Deutsche Telekom has been reluctant to spend money acquiring spectrum for their USA branch. Deutsche Telekom could go after a government auction or get it through an acquisition as Verizon just did by scooping up SpectrumCo.

The conversation moves to Dish Network which has its own wide group of AWS holdings that would lend to a perfect tie-in with T-Mobile. As Dish competitors (Bright House Networks, Time Warner Cable, Comcast, Cox) seek to partner with Verizon for wireless services, perhaps Dish will make a play to partner with T-Mobile. Its CEO has led us to believe that he likes the idea of hooking up with T-Mobile for that very reason. Dish plans to build its own LTE network and a partnership with T-Mobile could be mutually beneficial for both parties. The combination of spectrum from these dynamically diverse companies could allow them to come together even though they run two very different companies.

Now we’re faced with what I feel is the least likely scenario, a potential deal with Sprint. Given the opposition AT&T faced from the government, would a deal with Sprint face less roadblocks? It’s true that a Sprint/T-Mobile deal would create a powerful third competitor, but it would still cut the number of competitors in the top 100 markets. The government has made it clear they want four large competitors in the marketplace. Regulators might also be concerned about two value-priced carriers coming together and possibly influencing higher prices as a result. Aside from that, Sprint isn’t exactly cash heavy and not in any real place to make a serious offer for T-Mobile. Sprint has already committed to a wide launch of LTE and will need all of its cash to make that happen in the timeline it has proposed. If anything, a deal with Sprint could be more of an equal partnership and not one party having more control than the other. This could lead Deutsche Telekom to take a large stake in Sprint but even that may not be worth the trouble. Deutsche Telekom would have to pump cash back to help both companies continue with their LTE plans. A plausible but unlikely scenario.

So what about Deutsche Telekom in general? They could attempt to sell T-Mobile (again) to another major wireless player, likely a global partner. China Telecom and American Movil are two names that have rocketed to the top of the list. China Telecom may face an uphill battle as the government may put significant roadblocks in front of a Chinese-American deal. America Movil already has a combination of smaller, prepaid wireless carriers including Tracfone in the US market that offers an existing 15 million customer unit. Another name is CenturyLink, the third largest telecommunications company in the US, behind AT&T and Verizon Communications. CenturyLink currently owns small pockets of 700MHz and 1700MHz blocks of spectrum and might decide that a T-Mobile deal offers the best way to put that spectrum to use.

The bottom line remains that T-Mobile has taken some huge hits as of late and with the AT&T deal dead, it has an uncertain future. T-Mobile’s failed deal has cost it a lot of time and, with a lot of valuable spectrum, it remains very appealing to a lot of potential investors and suitors. T-Mobile will need to get creative as it begins to write its own path yet again and it might consider looking outside the box at a number of potential partners who can bring significant cash to the table. Examples are Amazon, Facebook, Google…all names that have been thrown about in conversation as potential deal-makers. With AT&T out of the picture, these conversations can get a little more serious and T-Mobile can begin to explore new opportunities in the hopes of improving its fortunes. Some of these names may sound crazy, but spectrum is a valuable commodity these days so it would behoove us not to write anyone off as a potential suitor.

We hope that Deutsche Telekom and T-Mobile get together and have a long, hard conversation about the past and where it must go in the future. The spectrum from AT&T is expected to be transferred before year’s end as AT&T prepares a roaming agreement with T-Mobile, allowing customers of both networks to make use of the other’s network. This will help keep T-Mobile afloat for the immediate future but it’s a short-term solution.

We hope by using one of these answers, or one we haven’t thought of yet, that T-Mobile revitalizes and begins to assert its underdog position as it works to grab new marketshare and reshapes its future. Come on Magenta, we’re with you.

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  • Anonymous

    I really hope the bring some new high end phone to there line up.  example the samsung galaxy note :)

  • http://twitter.com/Lawless_1 Lawless_1

    It is pretty obvious Dish network is the way to go. They have the spectrum we need. Not to mention we would have dibs on Hulu content which would sell a few handsets. Also bundle deals would be nice. I have been really close to switching to Cincinnati Bell a few times for a bundle pack with Directv (not to mention they have the Sensation free now and soon will offer a GSM version of Galaxy Nexus and Droid Razr)

  • Lupon

    I don’t know whether TMO getting the iPhone would be a good or bad thing. Sure, it could attract more customers but look what happened to AT&T and Sprint’s networks when they got the iPhone. I know TMO has a much better 3G network than either of them but I don’t want all the new iPhone users slowing down our network…

    • Anonymous

      Exactly

    • OSMANY MENA

      Sprints network was garbage even before the iphone

  • http://pulse.yahoo.com/_WWPX6LTLZHD27AXNEJZRBR4SKA Brian

    My God, proofread your article before you post it…

  • Bratty

    There is no win for Apple in buying TMo.

  • http://twitter.com/GusGomez G4tro

    Down the toilet…TMobile USA is a lost cost…

    • Tbyrne

      Then goodbye already!

  • Anonymous

    Now that AT&T is out of the picture, what I want to know is, when is T-Mobile coming back to its roots as a consumer-friendlier carrier? We saw many MaBell-ish moves from T-Mobile this year: data cap dropped from 5GB to 2GB, death of FlexPay, value plans with no value whatsoever… T-Mobile should reverse some of these policies.

    • CRT24

      Facts please? You pay for the data that you use so T-Mobile didn’t drop the data cap from 2gb to 5gb, you can sign up for either of those as well as a 10gb option. The value plans are the best price of the big three carriers even when with paying full price for the phone which has been shown time and again in this site and flex pay has been replaced by lower deposit requirements to go on a regular post paid account…..flex pay caused nothing but problems and it needed to go. You obviously have no clue what you are talking about.

      • archerian

        What was the problem with Flexpay? I believe it had a lot of customers

        • CRT24

          It was good for customers with credit issues because it allowed some to get service where they would have had large deposits with other carriers but the internal system and billing issues were a nightmare and that’s is what I was referring to regarding the problems with flex pay.

      • Kevin

        as an employee I agree flex pay needed to go… the concept was great but there were a lot of technical issues with it and it created some poor experiences for the customer… T-Mobile is on the right track with value plans if you compare those with other providers you won’t even come close to what T-Mobile offers. You might not get discounts on upgrades but you get 20 months to bill the price of the phone and most people don’t mind paying for phones.

  • YogiBear

    For the time being FORGET THE I-PHONE
    and go full steam ahead  with the
    BEST CUSTOMER SERVICE
    BEST 4G
    BEST PLANS
    BEST ANODROID PHONES
    and the BEST WINDOWS PHONES. < let NOKIA be your friend.

    • YogiBear

      Oh oh oh I forgot anonther…..

      The carrier that is the:

      BEST AT PHONE OS UPDATES

    • Occupytruth

      Verizon has the best customer service: jd power
      Verizon has the best 4g: LTE

      other than that i agree

  • tommy

    Some cable company Comcast or Cablevision, time-warner? Goog would be nice.

  • Anonymous

    i doubt a sprint/t-mobile deal will happen that combines the companies.  The government has really pushed it’s message clear that it wants four major carriers. 

    AT&T could have made major divestments in T-mobile USA to create a fourth competitor and that still wasn’t enough for the government. 

    The regulatory hurdles for a sprint/t-mobile mashup are being way underestimated.

  • BigMixxx

    Man…I read this and think…did he already write the story for t mobile or what….

    Yup, iPhone would be my first announcement.  While I’m not a fan, there are a couple of million people that are.  and a Low cost, National carrier with an iPhone and an aggressive attack schedule, I am for SURE going to get this for my network.

    Get you customers back t mobile.  The defection rate was SO high.  The aggressive marketing campaign should kick in and be just an all out assault on all carriers, showing the best rate plans in the industry.  clear out that old inventory and get ready to stock the shelves with some other interesting devices….

    Give some stuff away every weekend to get them into the store.  As they tell me, giving a phone away doesn’t really hurt (Giving a phone, cutting prices so low that you just have to consider it free) as long as you get contracted customers….(this get a rebate thing just is not attractive, while simple and understandable…it’s too much talking)

    I would even go as far as getting those on contract an opportunity to re-up their contracts with a Special day for those customers that want to just get a new phone! (IMHO). 

    • Bob Cheval

      Good post, BogMixxx…Much appreciate that although you don’t personally care for the iPhone there are many who perceive T-Mobile as not being as winner because they don’t offer it.

  • Lawrence of Arabia

    Google

  • Vim

    The problem with T-Mobile carrying the Iphone is the combination of the huge subsidy and large minimum order that Apple demands. That big subsidy Apple demands goes way beyond what T-Mobile offers for its android phones.  AT&T and Verizon are used to offering bigger subsidies and make it up by charging higher monthly fees. Sprint is under serious financial stress and the $20 billion Apple IPhone deal is a huge risk that could potentially help drive the company into bankruptcy within the next few years.  IPhone lovers don’t want to hear any of this, but the fact remains that Apple’s demands are a bad fit for T-Mobile’s current business model.  For T-Mobile to start carrying the Iphone, Apple will either need to either lighten up a bit on its demands, or T-Mobile will need to increase its monthly fees.

  • lair

    Can u do an article about what spectrum actually is how much it costs how u acquire or build it does it mean towers im confused are there diff types

  • where did tmo service go?

    Id like 49.99 for individual. Also as a longtime customer trying to stay loyal to tmo i have to say custserv at all levels has declined. reps constantly give me incorrect info, dont follow thru on promises, even ecr doesnt return calls &tforce doesnt email back. Frustration is so high that for first time, im very close to leaving magenta… And as long as ive had a cellphone, ive had tmo. bit they r basically forcing me put. On tmo forums and blogs u even read about reps telling customers to leave if unhappy. ive been calling ecr – leave voicemail twice in 2wks – rude unprofessional to not even return a call. prob will do sprint sero plan for 69 or take advantage of vzn double data

    • http://twitter.com/travh13 Travis

      may be tha reps caint under stand your terr able ing glish

  • http://twitter.com/johntajacobs Johnta` Jacobs

    I think either Google or Dish Network would be a good option or both of them G-Mobile and G-Network TV lol

  • JR

    Vodaphone UK should invest in Tmobile USA or buy it! That will give them a good global GSM network even though it has invested in Verizon’s CDMA network. Hey, atleast it will give the new owner more coverage, market penetration, less washington red tape, and above all….more competition….meaning more choices to us, valuable customers!

  • BlackSheep427

    No matter if you are talking about the iPhone deal that is needed or a deal with Sprint, there are huge risks involved with either. This is not to mention yet whether either is even likely or possible.

    As mentioned, Apple demands big from the carrier to even talk a deal. Sprint may be in hot water for their own recent deal. To gain iPhone fans, though, it may be worth attempting.

    Here is my scenario with a Sprint and TMO deal. Somehow or other, they combine cash assets to work out both companies’ needs but without a full-on merger or buy-out. Two separate entities boosting each other into better financial and business standing. Sorry, my plan is only half-baked, I am not a business expert. But, on the other hand, CenturyLink or Dish Net deal may be better for TMO.

  • Alandicho

    Iphone deal is a big JOKE for T-Mobile.  By the time T-Mobile carries iphone, Apple will launch Iphone 5 and guess what…It is an LTE phone!  The problem is, T-Mobile doesn’t have LTE network so the other carriers will still be ALWAYS ahead of poor little magenta.

    • Susanmeg

      AT&T and tmobile had backdoor talks about sharing spectrum and technology after the merger failure.  Don’t be surprised if LTE isn’t part of the sharing agreement.  AT&T still wants that company BAD and wants to see it technology stay in par with AT&T “until they can buy it.”  Although, I hope AT&T does never buy it.

  • Brianb

    Clearwire had been interested in a merger with T-mobile before the AT&T attempt.  Why not merge with Clearwire who is already ahead in the LTE market?  Yes, they work with Sprint but sprint had no objections.

  • Brianb

    The Iphone is coming to Tmobile in the next few years because the parent company isn’t going to sink two years of cash into buying it.  android is close enough now.  There is also a sort of “I own an Android NOT an Iphone” caucus out there.  Did you see how much cash Sprint had to give Apple upfront just to get the phone?  Sprint even said they risked bankruptcy if they couldn’t sell enough iphones (because they put all cash reserves into buying two years of Iphones).

  • Jcj1

    the iPhone causes carriers to lose money, check with ATT, verizon and sprint, facts are facts and when selling alot of iphones they LOSE money

  • Kevin

    I think it would be horrific for t-mobile and sprint to make a deal. Their technology is not the same in that t-mobile is GSM and Sprint is CDMA. How would they make the 2 networks work together? I heard that GSM is better anyway because most of the would uses it.