T-Mobile: Is there a plan B without an AT&T sale?

When Deutsche Telekom reports its third quarter results on Thursday the biggest question will revolve around T-Mobile's future.

Just a few weeks ago, the plan for T-Mobile was clear: Sell to AT&T. But U.S. regulators scuttled that deal on competitive worries. If appeals by AT&T and T-Mobile fail, Deutsche Telekom will get a $3 billion breakup fee and some spectrum. Despite those consolation prizes, Deutsche Telekom will still lack an exit strategy for T-Mobile, which now looks worse because AT&T, Verizon and Sprint all have the iPhone.

In other words, T-Mobile is looking at a lot of churn in future quarters.

So what is plan B? T-Mobile, Deutsche Telekom and AT&T are in a legal battle with the Department of Justice and really can't say. Of course that hasn't stopped others from speculating about what a plan B looks like for T-Mobile if the AT&T deal falls apart.

Bernstein analysts Robin Bienenstock and Craig Moffett portrayed T-Mobile as a sitting duck in a recent research note:

In anticipation of the deal's potential failure in the wake of the DOJ letter, T-Mobile has significantly increased its advertising. And it has introduced a potentially disruptive pre-paid pricing plan that is the industry's first to openly embrace "bandwidth arbitrage." But they can't do anything disruptive in post-paid – still their core business – for fear of bolstering the DOJ's case that they play an important role as a disruptor.

From a positioning point of view, T-Mo USA is more stuck in the middle than ever and bleeding higher ARPU customers to the top (AT&T and Verizon) and value seekers to everyone else. Device manufacturers and backhaul providers appear reluctant to do deals with a company that may or may not exist as an independent entity in just a few months.

Simply put, T-Mobile is facing a debilitating state of limbo. And if appeals drag on, T-Mobile may have to wait months to a year to try and revive operations.

According to Bienenstock and Moffett, T-Mobile's options have dwindled. It can't merge with Sprint because U.S. regulators seem hell-bent to have four large wireless carriers. One option for T-Mobile may be a merger with a cable operator. Comcast and Time Warner Cable could provide spectrum to the constrained T-Mobile. Comcast and Time Warner Cable hold the same spectrum as T-Mobile. T-Mobile gets a savior and cable gets an answer to 4G.

If this cable-T-Mobile marriage actually happened Deutsche Telekom could exit via an initial public offering of the wireless combination.

Jefferies analyst Ulrich Rathe argued that T-Mobile's Plan A---a deal with AT&T still could work. How? AT&T and T-Mobile would sell off enough assets to create a new national operator. The DOJ and AT&T are likely to negotiate right up until a Feb. 2012 trial.

In the meantime, T-Mobile sits. A plan that doesn't include AT&T would sure alleviate a lot of concerns from customers.

Related:

• Judge allows Sprint suit against AT&T, T-Mobile merger
• AT&T moves on to last-ditch efforts to save T-Mobile deal
• Seven U.S. states band together against AT&T, T-Mobile merger
• Why AT&T's arguments for the T-Mobile deal back it into a corner
• U.S. Justice Dept. moves to block AT&T, T-Mobile merger
• Feds aim to block AT&T’s T-Mobile purchase: The fallout
• CNET: Why the DOJ means business on AT&T/T-Mobile
• FCC will give joint attention to AT&T’s Qualcomm, T-Mobile deals