Subject: [NEXTEL-1] T-Mobile USA talks go nowhere

From: Marcel <[email-masked]>
Date: Tue, 12 Nov 2002 20:35:55 -0500

T-Mobile USA talks go nowhere
by Chris Nolter
Updated 05:51 PM EST, Nov-12-2002

Growing certainty that Deutsche Telekom AG intends to
keep its T-Mobile USA unit has shaken expectations about
wireless consolidation in the United States and added to
the perception that many small wireless carriers could be in
trouble.

Deutsche Telekom is expected soon to name the head of its wireless unit, Kai-Uwe
Ricke, to replace its ousted chief executive, Ron Sommer. Ricke's closeness to
the unit and his involvement in the 2001 acquisition of VoiceStream Wireless Corp.,
combined with reportedly disappointing sale discussions, have led many observers
to believe that the company will not sell the U.S. operation in the short term.

As part of an effort to reduce its roughly $65 billion in debt, Deutsche Telekom
floated the idea of selling T-Mobile USA, the former VoiceStream, earlier this year.
Cingular Wireless and AT&T Wireless use the same technology, GSM (global
system for mobile communications), and sources say they were involved in talks
with DT regarding the unit.

The other national wireless carriers, Verizon Wireless, Sprint PCS and Nextel,
use different technology and have not been considered likely buyers.

Fulcrum Global Partners LLCWashington AnalysisUtendahl Capital Partners
LP"Consolidation in this industry should have started a year ago," said Sean
Butson of Legg Mason Inc. "A Cingular-AT&T Wireless deal makes more sense,"
he said, adding that AT&T Wireless has more spectrum, more valuable customers
and stronger financials, and has nearly completed an upgrade of its network.

But such deals could face regulatory hurdles, Hasan noted. In addition, Verizon
has said that it is not interested in a large acquisition.

Even with consolidation, the wireless industry could still face intense price battles.

"The textbook wisdom says that with fewer players you have higher prices," said
Roger Entner of The Yankee Group. "That's like arguing that six guys who are
intent on slugging it out on price, when they are reduced to three or four, are going
to become nice and peaceful."

There are signs that the larger carriers may be stabilizing.

"I think the bigger issue is that many of these companies already have tens of
millions of customers," Piecyk said.

"The average revenue per customer was better than expected for most of these
companies in the recent quarter," he said, adding that the national carriers may be
shifting their focus from subscriber quantity to quality.

In the absence of consolidation, regional wireless providers, many of whom have
been hit by decreases in roaming revenues, will likely suffer.

"It does not have to be consolidation among the big six," Entner said. "We have
about another hundred wireless carriers in this country as well. I think consolidation
in that area is more likely and imminent."

He listed Qwest Communications International Inc.'s wireless division, Leap
Wireless, affiliates of Sprint PCS, Triton PCS and Dobson Communications Corp.
as candidates.

"You have the big six slugging it out, and its the little guys who fall by the
wayside," he said. "A friend of mine once said, 'When the bulls fight, the calves get
hurt.'"

Deutsche Telekom and T-Mobile USA have not returned phone calls.

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