Sprint (S) May Acquire T-Mobile USA from Deutsche Telekom

Deutsche Telekom AG and Sprint (NYSE:S) have reportedly been in negotiations over the T-Mobile USA held by Deutsche, where they would receive a big stake in the combined company.

Talks have been on and off, and a deal may not be reached, said the people, who spoke on the condition of anonymity because the talks are private. The companies haven’t been able to agree on the valuation of T-Mobile USA, which reported a drop in profit in the fourth quarter, the people said. Sprint and Deutsche Telekom shares jumped.

A merger of Sprint and T-Mobile USA would combine the third- and fourth-largest U.S. wireless providers behind Verizon Wireless and AT&T Inc. (NYSE:T) T-Mobile USA may be worth $15 billion to $20 billion, according to Michael Kovacocy, an analyst at Evolution Securities in London. Sprint’s market value was $13.6 billion as of yesterday’s close.

Deutsche Telekom may be disappointed in the price an acquirer is willing to offer, Kovacocy said in an interview. Even though the company may expect about $25 billion, given the unit’s earnings performance, buyers may want to pay less because of customer losses, he said.

“It’s selling from a weak position in the marketplace,” said Kovacocy, who doesn’t own shares in either company. “The operations could fetch well south of $20 billion, well below what DTE would look for.”

Sprint was trading at $4.68, gaining $0.20, or 4.35 percent, as of 11:54 AM EST.




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Verizon (VZ) Tops in Call Quality in Southeast

A study from J.D. Power and Associate called the U.S. 2011 Wireless Call Quality Performance Study, said the top wireless network company in the Southeast U.S. was Verizon Wireless (NYSE:VZ).

Metrics for the study include, among a number of measurements, failed call connections and static/interference.

Verizon topped five regions in the semiannual study.

The study also confirmed the migration to smartphones, increased use of texting and rising usage has pressured the improvement in quality for the overall sector.

Following Verizon in quality in the Southeast were Sprint Nextel (NYSE:S) ranked second in the region, followed by AT&T (NYSE:T) and T-Mobile, in that order.

Verizon was trading at $36.39, gaining $0.05, or 0.14 percent, as of 12:52 PM EST.

Apple (NASDAQ:AAPL) Having its Way with Verizon (NYSE:VZ)?

It sounds like Verizon's (NYSE:VZ) reported desire to keep competitors T-Mobile USA and/or Sprint (NYSE:S) from having Apple's (NASDAQ:AAPL) iPhone on their networks is making them very malleable to what Apple wants from them in return.

Kaufman Bros. analyst Shaw Wu said, "We are hearing that (VZ) does not want iPhone, the hottest selling smartphone, available on T-Mobile USA and/or Sprint and may be willing to pay for exclusivity to itself and AT&T. For these reasons, (VZ) could be more willing to give in to Apple's terms."

The only other competitor in the U.S. for Verizon would be AT&T Inc. (NYSE:T) if this is how it plays out.

Verizon customers should be able to use the iPhone on the wireless network in the early part of 2011.

Verizon closed Monday at $32.89, down $0.01, or 0.03 percent.

Motorola (NYSE:MOT) November Sales weak, Lost Share to Verizon (NYSE:VZ)

Citing their checks, Canaccord Genuity said it appears Motorola (NYSE:MOT) had weak sales in November while losing share to Verizon (NYSE:VZ).

Canaccord said, "Our checks indicated weaker sales for Motorola during November as we believe Motorola lost share at Verizon (NYSE:VZ) and sales remained weak at T-Mobile and AT&T (NYSE:T). Further, Motorola announced it will officially separate into two public entities on January 4, 2011...Based on our lower smartphone estimates, we are lowering 2011 EPS estimate from $0.55 to $0.51."

They maintain a "Hold" rating on Motorola, which closed Thursday at $7.97, dropping $0.04, or 0.44 percent. Canaccord lowered their price on Motorola from $8.25 to $8.