[Satellite News 10-20-09] Deutsche Telekom will not seek to acquire Sprint — a move that would have given the German company a considerable share of the U.S. wireless market. The acquisition would have also included a 13.1 percent stake in Virgin Mobile following a $482 million stock deal that Sprint is currently negotiating with the company.
    Deutsche Telekom confirmed comments that CFO Timotheus Hottges made to Bloomberg Oct. 13, which refuted rumors from analysts that the company, through subsidiary carrier T-Mobile, was seeking to consolidate the two massive networks. Hottges battled against a recent Bloomberg report that the company was in talks with Clearwire Corp., a majority owner of Sprint, and with MetroPCS Communications Inc. to acquire access to their networks.
    Deutsche Telekom said it would continue its plans to expand T-Mobile’s 3G network in the United States and compete with major national carriers Verizon and AT&T.
    Bloomberg is not alone in its belief that the U.S. mobile market would see massive consolidation moves in the next year. In a September report, Tammy Parker, principal analyst at Informa Telecoms and Media, said mobile operators in the United States now were more likely to consolidate as smaller carriers struggle to find success with revamped pricing schemes and product-positioning strategies in a saturated domestic communications market environment.
    Parker also suggested that Deutsche Telekom was considering a bid for Sprint Nextel and warned that the merger would face scrutiny from industry regulators and the aggressively anti-trust Obama administration. “This could keep large [acquisition] deals from coming to fruition anytime soon. A combination of T-Mobile and Sprint could be particularly tricky in the current environment, not only due to the size of the potential deal but also because of foreign-ownership issues that would have to be debated on both sides of the Atlantic,” said Parker, who added that T-Mobile and Sprint operate several networks, all with different air-interface technologies, which could create an integration nightmare.
    The assertions were supported by a report released in August by Terry Norman, senior analyst at Anlaysys Mason. Norman said his firm especially was alarmed by WiMax investors writing off billions of dollars in Clearwire, majority-owned by Sprint, which was planning to roll out with a national WiMax network through Clearwire this year. Norman said that in developed markets like the United States and Europe, the WiMax industry is in hot water, as its investments are disappearing due to a shift in interest towards Long-Term Evolution (LTE) platforms. The drain of WiMax financing may have a major impact on the future health of the U.S. mobile operator market.
    Parker discussed another possible merger — between regional U.S. carriers MetroPCS Communications and Leap Wireless — which have taken financial hits as their low-end, unlimited and prepaid service plans have been copied by national operators. “Smaller competitors are struggling to survive and match economies of scale enjoyed by the two largest mobile operators, Verizon Wireless and AT&T. … The two companies command a combined 60 percent of the mobile market, but smaller rivals continue trying to outmaneuver these top players as well as one another,” said Parker.
    Despite its acquisition predictions, Parker expects U.S. mobile operators to continue generating revenue — whether through consolidation, the addition of innovative revenue streams or new pricing and equipment strategies — citing positive figures. “There were 280.57 million mobile subscriptions in the United States during the second quarter of 2009, and U.S. mobile market penetration during [the 2009 second quarter] finally reached the 90 percent milestone. We expect U.S. penetration to exceed 100 percent at [the] end [of] 2012 and to reach nearly 113 percent by [the] end [of] 2014. This will be enabled by individuals having multiple subscriptions, integration of mobile communications access into consumer-electronics devices and increasing use of [machine-to-machine] communications,” said Parker.