We learned this week that Uncle Sam is less than pleased with the AT&T (NYSE:T) plan to purchase T-Mobile. This changes little for AT&T and Verizon (NYSE:VZ), of course, since the mobile market already is rapidly becoming a two-horse race. Sprint Nextel (NYSE:S) hasn’t turned a quarterly profit since early 2007, and T-Mobile has lost some 150,000 subscribers so far in 2011.
In fact, the Justice Department’s move to step in will do little to “save” T-Mobile. In reality, the only thing it will do is ensure someone other than Verizon or AT&T will wind up purchasing the $39 billion wireless carrier.
So who else is in the market to buy T-Mobile? I have a few suitors in mind — though most would take some accounting acrobatics or gutsy (perhaps crazy) strategic shifts:
Comcast
Verizon FiOS and AT&T U-Verse have been beating up cable internet providers like Comcast (NASDAQ:CMCSA). And with the rise of Netflix (NASDAQ:NFLX) and other streaming video alternatives, even entrenched leaders like Comcast are biting their fingernails about how things will look 10 years from now. The solution is to take the fight to AT&T, Verizon and the mobile carriers that have started to wear away the Internet service market.
Comcast doesn’t have the cash to buy T-Mobile on its own, with “only” $2 billion in cash on its balance sheet and a hefty $38 billion in debt — up significantly from $28 billion a year ago. However, some kind of strategic alliance with other cable providers could make things interesting.
Apple
Yes, Wall Street is littered with inane rumors about what Apple (NASDAQ:AAPL) will buy. But it’s fun to speculate about what the creative minds at Apple will do next — and the company’s $28 billion in cash and short-term investments gives it plenty to play with. The addition of T-Mobile would be intriguing, as Apple is all about owning the entire experience on its devices and its iconic iPhone still is at the mercy of third-party networks. Anyone who has read tech blogs or customer message boards about AT&T’s network should know that in many respects, the iPhone became a smash hit in spite of AT&T not delivering stellar support.
T-Mobile could move that service — and revenue — in house. Of course, Apple doesn’t tend to make big acquisitions and prefers to build things in house … but the capital expense of a 4G network and the logistics of rolling such service out seems to make this one of the few cases when it makes more sense to go outside Silicon Valley for a pre-made solution.
While we’re talking about “owning the entire user experience,” it’s important to note that Google (NASDAQ:GOOG) is pretty envious of the Apple model. That’s why it is purchasing Motorola’s mobile device arm for a cool $12.5 billion. Why not go whole hog and purchase a service provider, too, giving Google’s Android-powered smartphones the true potential to topple the iPhone as mobile’s premier device? Google certainly has the deep pockets and history of buyout binges to make this feasible, as opposed Apple’s clear lack of interest on the acquisition front.
However, it would be sticky for Google to get too entrenched in the end-to-end game, seeing as it continues to insist that Android is an open-source software that any manufacturer can put on its gadget. A T-Mobile buyout would slam the door on that idea, so Google would have to be confident they can pull such a coup off. Not likely considering the early stages of the Motorola deal (which, by the way, also needs DoJ approval to go through). But interesting to consider.
Sprint
Granted, Sprint would have to either stumble on a pot of gold or get creative with its balance sheet to form an alliance. To top it off, the company already is tangled up with Clearwire (NASDAQ:CLWR) in a bid to build up its wireless data network, and digesting T-Mobile on top of that would be a daunting task.
But the government’s largest argument against the T-Mobile merger was a reduction in competition that could harm consumers via an 80% market share in the hands of AT&T and VZ. Sprint’s market share has been eroding for years — and an alliance with T-Mobile could ensure there actually remains a viable No. 3 in the space. If investors, Sprint, T-Mobile and Uncle Sam get creative, they could find a way to ally the outsiders in mobile to create a serious competitor to AT&T and Verizon.
Foreign Telecoms
Perhaps the most intriguing buyout opportunity for T-Mobile would come from outside the U.S. America Movil (NYSE:AMX), the fast-growing Mexico telecom giant, could see a huge opportunity to push into the lucrative U.S. market via T-Mobile. The company has (seriously) $95 billion in cash on its balance sheet, so why not? America Movil is the world’s fourth-largest mobile operator and its billionaire owner Carlos Slim is above all a telecom guy, with his earliest businesses being in this sector.
But don’t think Slim would be the only foreign businessman who wants a piece of the U.S. market. Though it would be a harder sell to Congress than perhaps the AT&T deal, Russian-owned mega-carrier Wind Telecom invested in a new Canadian carrier and owns operations in Egypt and Italy. Why not the U.S.? Other foreign telecoms could be interesting but would need to win the lottery to finance the deal or seriously grease the palms of Congress to push things through. I’m talking about you, China Mobile (NYSE:CHL).
Jeff Reeves is the editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.
