[HTC Sensation] BarryH_GEG:
It's going to happen, T-Mobile and its parent, Deutsche Telekom are in trouble financially. Here's an excerpt of a discussion we had on the SGS2 board. There will probably be conditions on the merger like AT&T having to provide smaller competitors with access to their infrastructure or the spin-off of the post-paid business. This isn't an emotional decision, it's a financial one.

You guys keep dreaming, T-Mobile and its parent company are hemorrhaging. And as bad as Q1 was, the rest of the year's going to be worse as people stop choosing T-Mobile because of the uncertainty of the merger and other carriers start targeting their customers like Sprint already has.

FRANKFURT—Deutsche Telekom AG Friday said first-quarter net profit fell 37% as its European operations outside of Germany continued to suffer from weak demand and T-Mobile USA showed no signs of improvement.

The Bonn, Germany-based company said net profit declined to €480 million ($697.25 million), from €767 million a year earlier. Revenue fell 7.7% to €14.60 billion, from €15.81 billion a year earlier. Both figures include earnings and sales at T-Mobile USA, which Deutsche Telekom agreed to sell to AT&T Inc. in March for $39 billion in cash and stock. Excluding T-Mobile USA, which Deutsche Telekom now lists as a discontinued operation, first-quarter revenue fell 9.8%.

PhanDroid -- Things are just not looking good for the magenta T. T-Mobile’s latest earnings report for the first quarter of 2011 paints a sad picture of the mobile telecommunications company’s current state in the marketplace. It managed to remain relatively neutral in terms of added revenue for the first quarter time period, though that has been heavily offset by a massive loss in its subscriber base – to the tune of 100,000 customers. And remember this – the numbers came from the time period before the announcement of T-Mobile’s impending acquisition by the Death Star, also known as AT&T. The fallout from the merger news is expected to hit once the Q2 numbers are in, and one can only assume an even bigger defection of customers will take place to avoid assimilation into AT&T. As T-Mobile continues to struggle, the deal is looking more acceptable and less harmful to the competitive market.

As revenue declines they'll have to stop making investments in new products and services so it'll be a death spiral until the merger goes through. And the more disappointing their financial results, the more likely the merger is to happen. Also, the net loss of 100K subscribers doesn't tell the whole story. They lost 500K prepaid customers and replaced them with 600K post-paid customers that generate less than half the profit. Something to think about if your contract's going to be up soon. So your spiffy new dual-core AWS phone might become a collectors item. I'm not T-Mobile bashing, just calling it the way the analysts see it.​

On a margin basis, T-Mobile makes 1/3 less than AT&T on prepaid customers and less than half on post-paid. T-Mobile has more A/R write-offs than any U.S. carrier which speaks directly to the quality of their customer base. This information is available in their 8K and 10K. If T-Mobile and Deutsche Telekom were performing so well they wouldn't be in the financial mess they're in and would be acquiring, not selling assets. Sure there will be some benefit to AT&T from acquiring T-Mobile's customers but that's not what the meat of the ROI on the deal was based on. I guarantee you AT&T is projecting a loss of at least 1/3 (some by AT&T's choice) of T-Mobile's customers to be conservative in putting the the deal's numbers together. Keep in mind VZW and AT&T intentionally price themselves above Sprint and T-Mobile to be positioned as tier-one carriers and between them they own 2/3 of the corporate market where real profit lives. Sprint and T-Mobile have, and always will be, tier-two.​

This is just some information for you to consider. There's no need to debate it. Either the merger will happen or it won't and at our level of the food chain there's little we can say or do that will influence the outcome one way or another. From a business and financial perspective, Deutsche Telekom classifying T-Mobile US as a discontinued operation on their financial statement means that they are almost certain the deal will close.