After Deutsche Telekom decided not to challenge Telefonica's bid for the UK and German mobile operator, O2, industry pundits are now focussed on where Deutsche Telekom is likely to aim their sights. After all, it seems that Deutsche could get away with spending around $25bn on acquisitions given their sucess in reducing debt and restructuring their balance sheet over the last few years.
Well, it looks as though a transformational mobile phone acquisition is not the most likely outcome, which will of course depress the hell out of all those M&A bankers. It looks like Deutsche may instead focus on expanding T-Mobile agressively in the US.
T-Mobile today is the 4th largest mobile phone operator in the US, with particular traction on the east coast. But they're a distant 4th. And there isn't really anyone left for them to merge with given that AT&T Mobile got swallowed by Cingular and Nextel merged with Sprint.
So instead Deutsche Telekom is going to try and grow the T-Mobile franchise organically and invest $5-10bn over the next few years in upgrading their network to mobile broadband. Mind you, given that is what all the other leading US operators will be doing I'm not quite sure how this differentiates them. Maybe its because T-Mobile know about doing mobile broadband because they've already done it in Europe??
Given that T-Mobile has failed in building a truly pan-European mobile network to take on Vodafone and perhaps Orange, and given that they are a weak 4th in the US market, I can't help feeling that Deutsche Telekom will need to do more with their $25bn if they want to be a world leader in mobile telecoms.