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philyew

@consolidated.net
reply to ConstantineM

Re: 6 billion USD worth of spectrum, roaming and cash!

I think we will have to agree to disgree here, Constantine.

As a long-standing TM customer, I've closely observed how TM's management, at the behest of Deutsche Telekom, has done everything in its power to bolster short-term revenue over the last 6-12 months at the expense of the longer term security of the business.

They've been caught short on this approach because the shrinking prospect of a deal, if it is to happen at all, is getting pushed further and further back. As a result, they've had to make some recent moves to assuage their deeply pissed off customer base. Minor stuff nonetheless.

I don't see any hint that they are investing anything in the company which will not yield a return on investment before their expected departure date. Running the company as a "discontinued operation", as DT are doing, requires that they only make investments which will clearly return money to their stockholders. They'll need to see the post-AT&T market value of the company before any investment decision can be made.

Until AT&T stepped in, this whole adventure added up to a huge loss for DT. They poured $55 billion in purchase cost and assumed debt when they acquired the company 10 years ago. I saw a report of analysis from a private investment bank some months ago that said that, if they cleared the $39 billion deal with AT&T, DT would walk away with a TOTAL profit of around $700m over the whole lifetime of the deal.

Until AT&T stepped in, they were at the table with Sprint discussing a deal probably worth around 60% of what AT&T offered. That's the measure of the loss that DT were willing to take.

DT are not exactly in the most robust health over in Europe and they need funds from divesting TM USA to bankroll their necessary network upgrades over there. Because of the commercial timelines impacting that, I don't think they have the luxury of sitting out the situation in the USA and investing in TM's future until the "right price" comes along again.

Don't get me wrong, I think it would be good if they did, but they would have to do a lot in a relatively short space of time to get on board with LTE competitively, and DT have studiously avoided that kind of investment commitment here in the past.

I guess we can only wait and see.


karpodiem
Hail to The Victors
Premium
join:2008-05-20
Detroit, MI
You've done your homework on TM, and I agree with most of your statements. Who do you see gobbling up TM? Or will they liquidate?