Sprint, Deutsche Telekom reportedly in talks over T-Mobile USA merger

In the latest twist in an oft-rumored partnership, Sprint Nextel (NYSE:S) and Deutsche Telekom have talked about merging T-Mobile USA with Sprint in a deal that would give T-Mobile parent Deutsche Telekom a major stake in the new company, according to a Bloomberg report.

The report, citing unnamed sources, said the negotiations have been on and off and that a deal might not be reached. Further, according to the report, the two sides have not been able to come up with a valuation for T-Mobile USA, which lost 318,000 postpaid subscribers in the fourth quarter.

A Sprint spokesman declined to comment. A Deutsche Telekom spokesman declined to comment, but confirmed that the company sent a statement to Bloomberg that said the company could sell all or part of its U.S. operations, and that all options are on the table.

A tie-up between Sprint and T-Mobile has long been rumored, and speculation surged in 2009 that a deal might emerge between the nation's No. 3 and No. 4 carriers. However, there are major complications to merging the two companies: One of the biggest hurdles is that Sprint and T-Mobile run different network technologies, with Sprint operating iDEN and CDMA networks and T-Mobile running UMTS and HSPA+ networks. 

Complicating matters further are the two carriers' long-term 4G strategies. T-Mobile is rumored to be interested in purchasing spectrum from Clearwire (NASDAQ:CLWR), which operates a mobile WiMAX network. Sprint is the majority owner of Clearwire and also is a wholesale customer of the company.   LightSquared, which is building a wholesale LTE network, is also rumored to be talking with Sprint about a potential roaming arrangement.

 For more:
- see this Bloomberg article
- see this WSJ article (sub. req.)

Related Articles:
T-Mobile CEO Humm unveils turnaround plan, says 10% of churn caused by iPhone
Report: T-Mobile USA nearing deal for Clearwire spectrum
Report: Deutsche Telekom searching for U.S. partners
Report: DT now wants access to Clearwire, MetroPCS spectrum for 4G
Reports: DT not going to make a bid for Sprint

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