4 Reasons Why Apple Won't Buy T-Mobile


Monday Note's Jean-Louis Gassee indulged in a bit of wishful thinking last night, arguing that Apple (NAS: AAPL) should step in and wrestle T-Mobile from AT&T (NYS: T) .

Apple Wireless? That name has a nice ring to it -- but it's never going to happen. Let's go over a few of the reasons why Apple won't make a surprising bid for Deutsche Telekom's stateside wireless carrier.

1. Apple doesn't want to rely on a single carrier.
In one of the more humorous moments in iPhone rollout history, Steve Jobs ran into some technical glitches during last year's introduction of the iPhone 4.

"Got any suggestions?" Jobs asked one of his technical directors.

"Verizon," someone shouted from the audience. Laughter ensued.

AT&T may have been the biggest iPhone wireless beneficiary, as the iconic smartphone's exclusive domestic carrier until Verizon (NYZE: VZ) came on board. But the device's popularity also exposed the limits of AT&T's overworked network.

Adding Verizon Wireless was the best thing that happened to the iPhone. Apple is no longer at the mercy of one potentially unpopular carrier. Why would it want to repeat this mistake?

Turning T-Mobile into Apple Wireless might not immediately translate into carrier exclusivity, but why would AT&T and Verizon champion a device that happens to be owned by a competitor? Even if they continued to stock the iPhone, all of their promotional muscle would be go toward moving more Android and Research In Motion (NAS: RIMM) gadgetry to weaken their new rival.

2. Apple doesn't want to see its stock get crushed.
No matter how much sense it makes on paper, Apple's stock would take a blow if it either enters into a bidding war for T-Mobile, or attempts to snap up the company if and when regulators nix AT&T's buyout plans.

Apple has the money, and buying a foreign company's subsidiary makes financial sense, given the taxable implications of otherwise repatriating the bulk of Apple's tens of billions locked up abroad.

However, investors would still crush the stock on the news. Apple's operating margins are roughly double what AT&T and Verizon generate. Sprint Nextel (NYS: S) hasn't turned a profit in ages. Why would investors get excited about paying up for T-Mobile? One also has to imagine that just as carriers will shy away from the iPhone that handset makers would shy away from T-Mobile.

3. Apple's reputation would be maligned.
Folks love their iPhones, Androids, and BlackBerrys. Their testimonials get less glowing when you bring up wireless carriers. Calls get dropped. Signals are spotty. Consumers cringe as fees inch higher. So why would Apple get into a carrier business that would inevitably torpedo its good name?

Some T-Mobile fans may argue that its network is fairly reliable, but that may owe simply to its absence of data-devouring iPhone users. It's not a coincidence that AT&T and Verizon began moving to tiered pricing, and throttling unlimited data plans, after they began offering the iPhone.

4. Regulators may not sign off on the deal.
Finally, antitrust regulators may not be comfortable with letting Apple acquire T-Mobile. The deal would obviously shift the competitive landscape, with implications for all of the carriers and handset manufacturers.

Apple's ecosystem is already digging deep enough to make it the country's most valuable tech stock. Any further expansion would only earn it serious scrutiny from regulators and competitors.

Gassee may once have worked for Apple, but where this daydream's concerned, he's just plain wrong.

Would Apple buying T-Mobile, or perhaps even Sprint Nextel, make sense? Share your thoughts in the comment box below.

At the time thisarticle was published The Motley Fool owns shares of Apple and Research In Motion. Motley Fool newsletter services have recommended buying shares of Apple and AT&T, and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz is a fan of Apple, but doesn't want to be a customer of Apple Wireless. He does not own shares in any of the companies in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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