Deutsche Telekom, the large German-based carrier that is struggling to compete in the U.S. market with its T-Mobile subsidiary, is mulling a bid on Sprint, according to the British newspaper Telegraph.
“Sources said Deutsche Telekom could submit a bid for Sprint,” the report says, adding that the deal could happen within the next few weeks. This sounds pretty speculative — companies talk all the time about doing deals together. Still, a merger of the two companies would appear to make sense.
The United States has four large carriers. Sprint and T-Mobile are the third and fourth, respectively — trailing leaders Verizon and AT&T. We’ve argued before that Sprint and T-Mobile could get put out of business if they don’t watch out.
Deutsche Telekom chief executive René Obermann has promised to reverse the fortunes of T-Mobile UK and T-Mobile US, two units that have resulted in a huge €1.1 billion loss for the first quarter alone.
Deutsche Telekom is worth $60.45 billion, while Sprint is valued at $10.6 billion, so the combined company would have a stock market value of at least $70 billion.
Notably, this comes after Deutsche Telekom has already proposed a deal to merge T-Mobile UK and Orange, which would create the UK’s largest carrier with 37 percent of the market, ahead of O2′s 27 percent and Vodafone’s 25 percent.
It should be noted that rumors like this often come from the banking community. Bankers have an incentive to drum up publicity of a possible bid, in order to scare out other offers. Banks get paid a big commission when they complete a deal. The Telegraph notes in the first paragraph of its story that Deutsche Bank is the bank managing the possible bid.