T-Mobile USA IPO Or Spinoff Inevitable?

• Rob Jackson
• 15 years ago

We love T-Mobile USA. Say whatever you want about them… they were the first carrier to embrace Android and they took a risk that other carriers were unwilling to take. Android was a strategic advantage to them, but without SOMEONE initially stepping up, Android never would have gained the momentum it has now. Someone needed to step up and T-Mobile was that “someone”.

But Deutsche Telekom are the owners of T-Mobile USA and although its the 4th largest American carrier, the division has consistently lost money while Verizon and AT&T gain significant ground. There have been rumors of sell-outs and spin-offs before and it seems they are returning.

The Wall Street Journal is reporting that the most likely scenario is a T-Mobile USA IPO that would sell about 20% of the company. The possibility of selling TMO USA to an American rival is still a possibility, but less likely. Verizon and Sprint both run a CDMA-based network and AT&T’s GSM network runs different 3G bands. Clearwire could get in on the action but the company – owned by an array of conglomerates – doesn’t seem to be headed in the right direct; even Google has decided not to put any more finance/resources into the struggling company.

I’m not sure WHAT will happen with T-Mobile USA but I am truly hoping they don’t get sold to another American carrier. In the past 2 years, both on their own and in conjunction with Google Android, the company has been innovative and willing to push the envelope for their customers. In many cases, the opposition has responded, but they never would have if T-Mobile USA didn’t make the initial move.

Competition is good for customers and I would love to see T-Mobile USA stay in the market. However, to sell 20% of the company and have them invest in infrastructure and services as we move towards a 4G world… could prove ominous. If they’re losing money now, what path will prevent that from happening in the future?

If the company is losing money, T-Mobile USA definitely needs to make a move. But don’t be mistaken – selling the company or opening an IPO is NOT a strategy. Even with more money and/or a new owner there needs to be a plan that will help reverse the company’s financial woes.

Personally, I’m surprised to see T-Mobile’s problems as they seem to really have a handle on what their customers want. We’ve seen Sprint face similar fortune. I would love to be at the round table meetings discussing “What to do, what to do”… in the meantime we can only speculate and hope for the best.