Grim Future for T-Mobile

When the U.S. Department of Justice filed suit to block the AT&T/T-Mobile merger, it didn't just stymie AT&T and possibly snuff out hopes for thousands of good, living-wage jobs. It also put struggling T-Mobile, and its parent company, Deutsche Telekom, in an untenable position.

The German phone giant didn't look to sell T-Mobile just for the excitement of it. According to a Wall Street Journal Source blogger, "Deutsche Telekom wants to get rid of T-Mobile USA because it isn't willing to continue investing billions of dollars into network upgrades in a country where its growth prospects have been fading."

It's not as if Deutsche Telekom weren't aware of the problem. DT, "...grew tired of investing in the U.S. wireless industry, and it had been seeking ways to offload T-Mobile USA for at least two years before it settled on the sale to AT&T."

But in recent months, the problem with T-Mobile has gone from dispiriting to near-critical. T-Mobile, he wrote, "has been shedding customers since the deal was announced in March and faces a crippling shortage of the airwaves that feed data-hungry smartphones."

How bad is it? The Journal said that, "T-Mobile USA lost 149,000 customers in this year's first half and just 56,000 in all of 2010, leaving it with 33.6 million. Compared with the year-earlier second quarter, T-Mobile had about one million fewer contract customers..."

And if the AT&T deal truly fails? Unfortunately, a management board member told The Journal that "Deutsche Telekom AG hasn't prepared any alternative scenarios for its T-Mobile USA unit if a $39 billion sale to AT&T Inc. falls apart."

All the more reason for the DOJ to drop its suit and let the deal go through. Not only will the economy, the workers and CWA benefit, but so will the management and shareholders of T-Mobile. On the other hand, a declining independent T-Mobile will inevitably cut costs drastically, which means cutting the wages of those who already work hard for substandard pay. So, yes, T-Mobile seems to have a grim future ahead of it.

Deutsche Telekom the Loser in AT&T’s Bid to Buy T-Mobile USA (Wall Street Journal)

T-Mobile Left in the Lurch (Wall Street Journal)