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Deutsche Telekom’s [ETR:DTE] declining urgency to sell T-Mobile US [NASDAQ:TMUS] has complicated the American telecom space, where major players have been positioning themselves for the convergence of wireline and wireless services, according to a source familiar and a source briefed on the matter.

T-Mobile has long been seen as the odd man out in US telecom, waiting for an inevitable acquisition by a suitor. A 2011 merger with AT&T [NYSE:T] was blocked by the Federal Communications Commission and the Justice Department. In 2014, FCC's pushback led then-larger peer Sprint [NYSE:S] to drop its own plans to acquire T-Mobile.

However, since Donald Trump's victory in the presidential election, the new Republican administration – with a more traditionally conservative laissez-faire view of regulation – has led to speculation that Sprint would take another run at T-Mobile.

Since 2014, the relative status of both companies has changed: T-Mobile is now larger than Sprint by subscriber count, lifted by an extremely strong turnaround that has seen it consistently posting the strongest net customer acquisitions quarter after quarter in the industry. Sprint, meanwhile, has sagged, with majority owner Softbank [TYO:9984] at times seeming to waver in its commitment to the company. This has forced Sprint to use unorthodox methods of raising additional capital such as placing spectrum assets in three subsidiaries that then used them to secure a USD 3.5bn bond issuance.

Deutsche Telekom, the majority owner of T-Mobile US, has real doubts about the “financial liability” associated with a Sprint deal, the source familiar said.

The German telco does not see the need to do a deal now that T-Mobile US is cash-generative and its price expectations would be “significantly higher” than during previous negotiations, said the source briefed.

Sprint, for its part, may try to tack toward a different course: at a recent investor conference, Softbank CEO Masayoshi Son said that a merger with T-Mobile is not the company’s only course, and that Softbank could even consider selling Sprint.

Wireline players measure their strategy

Long discussed on the sidelines of first Comcast’s [NASDAQ:CMCSA] and then Charter Communications' [NASDAQ:CHTR] attempts to acquire Time Warner Cable, the convergence of wireline and wireless is now seen more and more as an inevitability.

Reports last month that wireless operator Verizon [NYSE:VZ] CEO Lowell McAdam had approached Greg Maffei of Liberty Media [NASDAQ:LMCA] about the possibility of acquiring Charter, in which Liberty holds a significant minority stake, brought the convergence theme to the fore.

Such a deal, said a sector adviser, would have stumbling blocks such as enormous antitrust risk, the need to divest significant assets in at least the New York area and questions around Verizon’s ability to shoulder the enormous debt burden when it is not yet delevered from previous deals. Despite these hurdles, the merger possibility cannot be completely written off, the adviser added.

Uncertainty around the potential for this or any other deal is largely a result of the quiet period currently covering telecom companies, necessitated by the FCC's continuing auction of 600 MHz wireless spectrum during which it is illegal for participants to discuss how they will use or bid for airwaves. This quiet period is clouding analysis of what the wireline players might do, said three sector advisers.

Liberty is not a participant in the auction; Comcast, T-Mobile and Verizon are participants, and thus covered by the quiet period.

CEOs drop public hints

This hasn’t stopped speculation from some players involved: at a recent Lionsgate [NYSE:LGF] investor day, Liberty Chairman John Malone mused about the possibility of the major US wireline companies forming a group to purchase T-Mobile.

The source briefed said Malone is preoccupied with the question of how Liberty’s assets should evolve in the US, particularly given that it has no presence in the wireless space.

However, the adviser said that all signs currently indicate Comcast and Charter are committed to their organic plans to enter the wireless business. Both have an MVNO agreement with Verizon that will allow them to send traffic over the carrier’s network, and Comcast is seen as a serious bidder in the 600 MHz auction.

The two cable companies could collaborate on these organic efforts. Comments filed by wireless incumbents at the FCC at its review of Charter’s unsuccessful attempt to acquire Time Warner Cable were aimed at building an argument against allowing such cooperation and the incumbents are still wary of such a prospect, said the second and third sector advisers.

Cooperation could conceivably extend to forming a joint venture that will hold any spectrum Comcast acquires for joint use by Charter and even the third-largest wireline operator Cox Communications, said the second and the third advisers.

However, should the organic plan fail – as T-Mobile CEO John Legere in an open letter earlier this year predicted it would – a joint deal for T-Mobile is a definite possibility, said the first sector adviser. A group deal would be more likely than any one wireline company making a move, because wireline companies are regional in nature, while T-Mobile is a national business, the source briefed said.

In his letter, Legere went further, predicting that Comcast and Verizon would ultimately have to discuss a merger of equals. If there is some combination of a wireline company and Verizon, Altice [ATC:AS] will be eager to pick up any divestitures, and will offer a good valuation for them, especially if they are in New York, said the first sector adviser and a person close to the company.

Deutsche Telekom declined to comment. Comcast declined to comment, citing the auction’s quiet period. T-Mobile and Verizon did not respond to requests for comment. Altice declined to comment.