T-Mobile USA’s parent, Deutsche Telekom (ETR: DTE) is considering various strategic options for its US unit. The telecommunications provider is also considering initial public offer (IPO) for T-Mobile USA as one of the options.
T-Mobile failed to attract Smartphone customers against Verizon (NYSE: VZ) and AT&T (NYSE: T). The company lost about 77,000 customers in the third quarter and the sales declined to 2.4 percent to about US$5.38 billion from a year prior. There is a hope that results may show some improvement in fourth quarter but it will be difficult as US is a market where most of the population already has mobile phones.
Although it is still not certain that the company will go for an IPO. Still the possibility cannot be denied. Researchers believe that this is not an ideal time for an IPO.
Some analysts believe that Deutsche Telekom can also boost the US business through mergers and acquisitions. MetroPCS (NYSE: PCS) and Leap Wireless (NASDAQ: LEAP) are also looking for a strategic alliance, so they can be a good option. The challenge is that they are at a different wireless technology as that of T-Mobile. AT&T is on the same network technology, but it could be a difficult move as it will be most likely opposed by antitrust regulators.
It has been seen that Deutsche Telekom is facing trouble in devising a strategy for the US market since 2001 when the company acquired the former VoiceStream Wireless for US$35 billion. T-Mobile will very soon come up with announcement as in the UK T-Mobile has plans to get associated with a rival company.
The company had generated about US$9.7 million in free cash flow last year. The company has German government as a majority shareholder with about 30 percent control of the company. Due to this, the company is tied up and is unable to fund T-Mobile's infrastructure.
The company still has to come up with a strategy to survive and do well in US market. The company may come up with an IPO but it is too early to comment on it. In the past, the German company had plans to for an IPO but the plans were quashed at the last moment. Its time for wait and watch for T-Mobile!
