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Report: Deutsche Telekom considers IPO for T-Mobile USA

The German phone company is considering an initial public offering for its U.S. wireless operator, T-Mobile USA, The Wall Street Journal is reporting.

Deutsche Telekom is looking into an initial public offering that could lead to spinning off T-Mobile USA, according to a report in The Wall Street Journal Thursday afternoon.

The newspaper reported that the German phone company has held talks with banks about underwriting the IPO. Unnamed sources in the story said the proceeds from the offer could be used to spin off the wireless carrier or fund its expansion in the U.S. market. The company is expected to decide over the next couple of months if it will have an IPO and how it would spend the cash.

Deutsche Telekom declined to comment for The Wall Street Journal article, and T-Mobile USA representatives said they can't comment on speculation or rumor.

T-Mobile USA is the fourth largest wireless operator in the U.S., and it has trailed far behind its national competitors, AT&T, Verizon Wireless, and Sprint Nextel. It has also been late to the 3G market, and the operator, which acquired more spectrum in the Federal Communications Commission's AWS auction, is still building that network.

In the past few quarters, T-Mobile has been losing subscribers, while AT&T and Verizon Wireless have added millions of new customers.

Spinning off the business while allowing Deutsche Telekom to retain some control of T-Mobile USA seems like the most likely scenario, according to The Wall Street Journal.

Deutsche Telekom has long been rumored to be shopping around T-Mobile USA. But the company's prospects of a merger are slim. T-Mobile is a GSM carrier, and the only likely candidates for a merger do not use the same technology. Sprint Nextel, which had been rumored to be considering buying T-Mobile, uses CDMA. Smaller regional carriers MetroPCS and Leap Wireless also use CDMA. That would mean transitioning and combining those networks would be expensive.