Analysis: Sprint Likely to Get Piece of T-Mobile

Analysts Say AT&T to Divest Piece of T-Mobile to Sprint

While it seems likely that AT&T is purchasing T-Mobile, at least in part, to block Sprint from doing the same, analysts are suggesting that  the deal may actually put part of T-Mobile in Sprint's hands.

According to a research note from Citadel Securities on March 23, AT&T is prepared to make formidable concessions in order to obtain regulatory approval for the merger, and that these will like include divestiture of a significant portion of T-Mobile's subscribers - 40% or more.

Citadel's note states that "We would view this outcome as positive for Sprint, which we believe would be a likely bidder for the divested operations. Although not as favorable as a straight Sprint/T-Mobile merger (at a fair valuation), Sprint's ability to acquire some portions of T-Mobile would help it achieve better scale."

T-Mobile Suffered from Poor Management by Deutsche Telekom

While it appears that T-Mobile is the victim in this transaction, Strand Consult, the Danish research team, suggests that they are really only victimized by the mismanagement of their parent company, --, who should have known better. DT had already had enough experience through its European operations, the analysts said, that they could have avoided T-Mobile's woes, "if they had just been a little better at identifying and utilizing the experience and information...that they already had access to within their own international corporation".

This will most likely be a slow process towards FCC approval, so it will be some time before we know the final outcome. "There's no way the chairman's office rubber-stamps this transaction," said an FCC official. "It will be a steep climb to say the least."


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