T-Mobile Deal Leaves Sprint’s Future Unclear

Sprint Nextel's future just got fuzzier.

Over the past several months, Sprint had held its own talks with Deutsche Telekom, the owner of T-Mobile, over a potential deal, as part of an effort to gain sorely needed scale and wireless spectrum. The talks were weighed down by several major issues, including Sprint’s and Deutsche Telekom’s differing valuations of T-Mobile. Another, more technical issue revolved around the two companies’ use of different cellphone technologies. Sprint currently uses a standard known as CDMA, which is limited mainly to the United States and a handful of other countries. T-Mobile relied on the more common GSM technology. But Deutsche Telekom’s discussions with AT&T moved more quickly this month, and the two reached a preliminary agreement last week. If the deal is approved, AT&T would again leapfrog Verizon Wireless to become the country’s biggest cellphone service provider, and Sprint’s strategic options would become more limited. Sprint Nextel, the product of an ill-fated merger in 2005, risks being further eclipsed by Verizon and the new AT&T, which together would boast 230.3 million customers in the United States. By contrast, Sprint has just under 50 million customers. Underpinning the interest for T-Mobile is concern by the major service providers about limited wireless spectrum. As more and more Americans adopt devices like the iPhone, Android smartphones and tablets like the iPad, cellphone carriers are urgently seeking to add more and more capacity to handle customers’ data use.