Deutsche Telekom examines merger with T-Mobile US
Combined company might seek a listing in the US and Europe
Deutsche Telekom is considering a merger with its American mobile arm T-Mobile US in a move which would create one of the world’s largest telecoms groups and strengthen its hand in future dealmaking.
Deutsche Telekom has been discussing the idea of establishing a new holding company which would make an all-stock bid for shares of both its existing operations and those of New York-listed T-Mobile US, said two people familiar with the matter. The German telecoms group is already the largest shareholder in T-Mobile US, with a 53 per cent stake.
The deal under consideration — which could potentially rank as one of the largest pieces of public market dealmaking — would create a corporate entity controlling Deutsche Telekom and T-Mobile US.
The holding company would likely be headquartered in a European country other than Germany, one of the people briefed on the situation said.
The company might seek a US and a major European stock exchange listing. Bloomberg first reported that Deutsche Telekom was considering a full combination with T-Mobile US.
Deutsche Telekom, Europe’s largest telecoms group with a market capitalisation of more than €142bn, has relied heavily on the growth of T-Mobile US, which merged with rival Sprint in 2020.
T-Mobile US, which has a market value of $215bn, was once a smaller player in America but now competes directly with market leaders Verizon and AT&T.
Discussions about combining Deutsche Telekom and T-Mobile US are at a preliminary stage, one person with knowledge of the talks said.
Another said the two companies have considered a full tie-up for years and there was no certainty a deal would proceed.
Any transaction may require political and regulatory approval in Germany and the US, other people said.
The German government owns about 14 per cent of Deutsche Telekom, while the country’s state development bank KfW controls a similar shareholding, giving officials a significant voice in any transaction.
The two companies jointly said: “As per our usual practice, T-Mobile and [Deutsche Telekom] do not comment on speculation regarding our corporate activity, nor are there specifics to comment on.”
Deutsche Telekom chief executive Tim Höttges, who also chairs T-Mobile US, has regularly touted the American market as being more favourable to mobile operators because of its consolidated nature compared with European equivalents.
James Ratzer, analyst at New Street Research, said any tie-up involving T-Mobile US would give Deutsche Telekom “more control over future [mergers and acquisitions] in the US”.
“This deal strengthens DT’s long-term position as a European shareholder in the US as it also makes it harder for anyone to ever make an offer to buy out T-Mobile in future US consolidation,” he added.