Deutsche Telekom is at the heart of a flurry of M&A speculation linking its US mobile arm – T-Mobile USA – with a host of US competitors, including MetroPCS, Clearwire and AT&T. Last week, Germany’s Handelsblatt newspaper, citing unidentified sources at the German telecoms giant, reported that the group is looking for a partner for its US business to help finance network expansion. However, sources subsequently told Reuters that, while the firm is keeping its options open, no deal is expected in the short term. As well as a tie-up with a rival, Deutsche Telekom is also mulling partnering with a financial investor, which could see the investor taking a stake in its US unit. According to earlier reports, T-Mobile USA – the country’s fourth-placed operator –  is looking at the most cost-effective way of building a nationwide high-speed network in order to keep pace with rivals such as AT&T and Verizon Wireless, which are already planning to upgrade their networks to enable ‘next-generation’ services. However, sources say that the German company is no longer considering a takeover of rival Sprint-Nextel, as has previously been reported.

Meanwhile, Dow Jones Newswires reports separately today that – as well as being linked with T-Mobile – MetroPCS is once again being linked with a possible merger with its US prepaid counterpart, Leap Wireless. The most recent MetroPCS/Leap merger recommendation comes from Pali Capital analyst Walter Piecyk. “While this might be viewed as giving up or showing no faith in the companies’ ability to compete, we believe investors need to face the reality of an increasingly competitive market and the underlying asset value of the spectrum position at a time when spectrum is in demand,” Piecyk said in a note. He added that a merger would unlock US$2 billion of value from increased strategic positioning of the combined spectrum, as well as more than US$200 million of annual cost savings. Both operators saw customer growth contract in the third quarter as growing competition in the US low-end prepaid space continued to impact their businesses.