T-Mobile to Spend $4 Billion, Probably Too Late (T, VZ, VOD, DTEGY, S)

Wireless carrier T-Mobile USA plans to spend about $4 billion to build out its own 4G LTE network. Oddly enough, the $4 billion is likely coming from a cancellation fee paid by AT&T Inc. (NYSE: T) when the merger deal with T-Mobile, which is owned by Deutsche Telekom AG (OTC, DTEGY), was withdrawn. That fee probably brought T-Mobile some $3 billion in cash and $1 billion worth of spectrum and other items. It also cost the company more than 800,000 subscribers in the fourth quarter alone.

Unfortunately for T-Mobile, neither Verizon Wireless, the joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone plc (NASDAQ: VOD), nor Sprint Nextel Corp. (NYSE: S) was sitting on its hands while the AT&T merger deal stumbled along. Verizon Wireless rolled out the largest 4G network in the country and took over the lead in subscribers from AT&T. Sprint did a deal with Apple Inc. (NASDAQ: AAPL) that brought the iPhone to Sprint customers.

Deutsche Telekom ought to just offer its shareholders a one-time dividend if the company is determined to spend $4 billion. Even if T-Mobile does get its 4G network built, it will be at least 2 years behind Verizon and AT&T. And the company still won’t have the iPhone. Nor will T-Mobile have as many subscribers then as it does now.