Monday, September 8, 2014

Deutsche Telekom Signals Willingness to Sell T-Mobile US

Deutsche Telekom will accept offers for T-Mobile US that value the company at a minimum of US $35.00 per share, according to a report. In a meeting last week, DT senior managers reportedly said that a valuation of the company between US $35.00 and US $40.00 per share could trigger talks. In August, Deutsche Telekom rejected a US $33.00-per-share bid by France’s Iliad, which came after Sprint ended talks with T-Mobile because of regulatory concerns. In the meantime, the company is preparing for U.S. spectrum auctions in November and early next year, although management has yet to specify how the auction will be financed.

T-Mobile US has added millions of customers over the past few years with its low-priced no-contract plans paired with enticing offers to cover the early termination fees of other providers’ customers who switch to its service. The company has had success in the U.S. market, but it imposes risk on its German parent company because of the upcoming spectrum auctions, in which it will have to compete with U.S. giants Verizon and AT&T, and because its network needs to be upgraded to stay competitive. These risks are good reasons for DT to want to divest itself of T-Mobile, and with this US $35.00-per-share valuation, it is signaling its interest in pursuing a sale, perhaps eliciting an improved offer from Iliad or bringing in new proposals from providers such as Dish Network Corp., which has expressed an interest in acquiring T-Mobile.

 The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:

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