Monday, July 04, 2005 - Deutsche Telekom Unit Is Hung Up Over Future - Deutsche Telekom Unit Is Hung Up Over Future

Consolidation is still needed in the US cellular phone market. AT&T wireless is gone, NXTL and FON will complete the merger soon but T-Mobile is still trying to hold a 10% market share. The largest cell company in the world, Vodafone, owns 45% of Verizon. Vodafone would like to control a US cell phone company. Verizon and Sprint use one of the two systems where as Cingular and T-Mobile use the other standard. Vodafone uses the same standard as Cingular and T-Mobile.

Wireless internet will be the big growth area for cell phone companies for the next many years. Google just made another deal to be the home page. Vodafone is likely to stay with VZ thus the Cingular deal to buy AT&T wireless has left T-Mobile out in the cold. The two big levers T-Mobile has are the ability to spend 10 Billion to upgrade to the new systems needed and the possible opening for Vodafone to compete directly in the US market. Cingular, FON and VZ would love for T-Mobile to be gone but not to Vodafone. Maybe Cingular will step up to the plate and take this one out.

As FON-NXTL investors, my family looks forward to the roll-out of high speed wireless internet-phone services. As consumers, we expect to enjoy using the internet on the road. We think it best for T-Mobile to sale but FON does not need the assets. Should Cingular or VZ buy T-Mobile, FON should benefit. In any event, we plan to hold our FON-NXTL investments. Land line phones are dying; long live FON-NXTL!