The Globalization of Wireless Networking

Wayne Rash

It's no secret that T-Mobile USA is part of the European telecom giant, Deutsche Telekom. It's also not a secret (but not advertised) that almost half of Verizon Wireless is owned by UK-based Vodafone. Right now, AT&T is a huge public company owned by lots of investors from all over the place. Sprint is also a U.S.-based public company. The question that seems to be emerging is how long this state of affairs can be maintained.

There's a possibility, for example, that Sprint could be in Deutsche Telekom's sights for acquisition through a complex series of moves that has so far put a former T-Mobile CEO in place as chairman of Clearwire, which is majority owned by Sprint, and which has been actively pursued by Deutsche Telekom. This would, in effect, make T-Mobile a part owner in Sprint's 4G network provider.

John Stanton ascended to the chairmanship of Clearwire following the sudden, and unexplained, departure of cellular pioneer Craig McCaw at the end of December. Prior to that, most of Sprint's executives resigned from Clearwire's board. Clearwire, for its part, has confirmed talks with Deutsche Telekom about an equity stake.

While part ownership of Clearwire by the European telecom giant isn't a done deal yet, it seems like it's only a matter of time. The only stumbling block is Sprint, which has declined further investment in the one company that holds the key to its success in the world of 4G. The reason, according to many analysts, is that Sprint is having money problems of its own. But for T-Mobile's parent to buy the rest of Clearwire, Sprint would have to agree. Would it?

Right now Sprint is in a very difficult position. It was the leader in the 4G market in the U.S. with its announcement of WiMax a year ago. But the rollout of its WiMax network has been slow, and is getting slower as Clearwire-which provides the 4G service for Sprint-runs out of money. It would seem that the only way for Sprint to get a real nationwide WiMax network would be to agree to sell part of it to a foreign competitor.

Unless of course, there's a bigger game under way. John Stanton is known to be a deal maker with an enviable track record. He ran Sprint's spin-off GSM network, VoiceStream, back when Sprint decided to switch to CDMA. He engineered the deal that sold that network to Deutsche Telekom, and then ran it under its new name, T-Mobile USA, as CEO. While getting an investment into Clearwire would save that company and probably Sprint, as well as getting T-Mobile access to a source for LTE technology, it doesn't seem like the kind of deal that one would expect from John Stanton. It's entirely possible that the ultimate goal is really Sprint.

If T-Mobile, or its parent Deutsche Telekom, takes over all or part of Sprint, then all but one of the U.S. wireless companies would be owned by a company outside the U.S. The only other one is AT&T, which as a publically traded entity is vulnerable to takeover by anyone with enough money. It would take a lot of money to buy AT&T, but bigger deals have been made before.

So the question is, does it matter? Initially, even if Sprint does get acquired by Deutsche Telekom, not much is likely to change. In the long run, it might be a benefit since the economic ups and downs of telecom companies are rarely in sync around the globe. So while the economy may be weak in, say, Eastern Europe, it might be fine in the U.S. This helps keep the companies stable, and helps prevent things like wireless companies going bankrupt.


On the other hand, the national wireless infrastructure is critical to the stability of the U.S. Is it a good thing to have most of that infrastructure in the hands of non-U.S. companies? Ultimately, Congress and the FCC will have to answer that question, but it's a question that's very much worth asking.



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