Under pressure from stockholders to improve their financial performance, Sprint Nextel and T-Mobile USA -- the third and fourth largest U.S. mobile phone carriers, respectively -- are reported to be discussing the possibility of T-Mobile investing in Sprint's Clearwire operation.
The Wall Street Journal reported Wednesday that Sprint's directors are debating allowing T-Mobile to invest in its Clearwire unit, which needs additional financing to complete the nationwide rollout of its 4G WiMax network. With a 54% ownership stake, Sprint controls Clearwire.
While both Sprint/Clearwire and T-Mobile currently have strong, new networks, they are likely to be overshadowed in the coming months by Verizon Wireless' long-term evolution network, which is scheduled to debut by the end of this year. AT&T plans to follow with its own LTE network next year.
An investment in Clearwire by T-Mobile could involve the Deutsche Telekom unit in Clearwire's TD-LTE trials planned for Arizona later this year. Fueling the push for all carriers to get on the LTE bandwagon is a new report from the Global Mobile Suppliers Association, which shows a more than 70% jump in six months in the number of carriers committing to LTE.
In the meantime, Sprint/Clearwire and T-Mobile are touting their networks' robustness. Clearwire's WiMax network -- already up and running in several dozen U.S. cities – is well-established and popular with users while T-Mobile's HSPA+ overlay is being touted by the company as being as good or better than the Sprint 4G offering.
In spite of their robustness and popularity, Clearwire's WiMax and T-Mobile's HSPA+ are increasingly looking like interim networks as the mobile world marches to LTE.
The Wall Street Journal report noted that there are differences among Sprint's directors on doing a T-Mobile deal. Earlier this year, T-Mobile Deutschland explored the possibility of spinning off T-Mobile USA in an initial public offering or an acquisition, but neither approach got any traction at the time.
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