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Could T-Mobile Become C-Mobile?

Michael Harris
BroadBananas
Michael Harris
7/6/2005

U.K. newspaper The Observer reported on Sunday that Germany's Deutsche Telekom is considering selling its T-Mobile USA wireless business for $25 billion or more (see http://observer.guardian.co.uk/business/story/0,6903,1519755,00.html). The Wall Street Journal picked up on the story yesterday (subscribers see http://online.wsj.com/article/0,,SB112040374043476283,00.html) pegging the potential sale price at $30 billion and naming U.S. cable companies as potential bidders. According to the Journal É 'Some top Deutsche Telekom executives have argued the company should sell T-Mobile USA and use the proceeds to make acquisitions in Europe instead of spending billions of dollars in the next few years to build a faster network in the U.S. to keep pace with rivals offering high-speed wireless Internet access.' T-Mobile, the fourth-largest U.S. wireless carrier with 18.3 million customers, is only one of two mobile players not controlled by the Baby Bells. The other is Sprint-Nextel. It is no secret that the largest U.S. MSOs have been meeting with investment bankers for months to evaluate wireless business options. T-Mobile could prove to be the perfect buy, assuming a cable kiretsu could secure a creative financing arrangement that would not significantly add to the industry's debt load. MSOs are keen to see any deal value the marketing muscle cable can deliver by bundling mobile with their successful IP phone offerings, as well as the cost savings that can be created by using MSO network facilities for cell site backhaul, as well as cable modem networks for 'backhauling' in-home mobile phone calls via VoIP. Could it be that T-Mobile in effect may become 'C-Mobile' -- the cable industry's wireless play? Stay tuned.

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