T-Mobile IPO Mulled

TechFlash reports: Rumors circulated for months over the future direction of T-Mobile USA. Just last December, there was chatter that Sprint Nextel could merge with the Bellevue, Washington-based wireless carrier.

Now, the Wall Street Journal reports that the company's parent, Deutsche Telekom, may consider spinning off T-Mobile USA through an initial public offering that could value the company at $20 billion.

The Journal notes that Deutsche Telekom is "risk averse," and therefore it is not certain that it will go through with the IPO. Deutsche Telekom also is weighing a possible sale of T-Mobile, though the Journal said that option is "less likely."

The report indicates that bankers are advising the company on its options.

The Journal reports:

T-Mobile USA has languished under perceptions that its wireless network is inferior and lacks reach, a major shortcoming as customers turn to their cell phones to surf the Internet and stream video. In the third quarter, 77,000 users walked away from T-Mobile USA, while AT&T and Verizon Wireless added millions of customers. Taking T-Mobile USA public would be a way to fund the build-out of new wireless technology that will keep its services current without relinquishing control of a business that had long been a corporate growth engine for Deutsche Telekom.

If an IPO does it occur in the $20 billion valuation range. T-Mobile's current rival, AT&T, raised $10 billion in April 2000, and its valuation at the time was in the tens of billions.

T-Mobile is the fourth biggest wireless carrier in the U.S behind Verizon, AT&T, and Sprint Nextel.