Media: Telekom reportedly exploring merger with US subsidiary T-Mobile
According to media reports, Deutsche Telekom is considering a complete merger with its US subsidiary T-Mobile US under a joint holding company.
T-Mobile headquarters in Bellevue (Washington State, USA).
(Image: Ian Dewar Photography/Shutterstock.com)
According to media reports, Deutsche Telekom is developing plans for a merger with its US subsidiary T-Mobile US. The group's management is exploring various scenarios, such as how a merger under a joint holding company could be structured, Handelsblatt and Bloomberg report, citing company sources. Telekom declined to comment when asked.
It would be the largest deal in stock market history: while T-Mobile US is valued at approximately 215 billion US dollars, Deutsche Telekom is valued at around 155 billion. With a merger, CEO Tim Höttges could mitigate this differing valuation of the two companies, Handelsblatt speculates.
A global player?
Furthermore, a joint company could undertake larger acquisitions in the USA again without Telekom losing control over T-Mobile. The German parent company currently holds around 53 percent of the shares in T-Mobile. Together, the partners would also be better equipped for major investments in AI infrastructure.
The considerations are not yet far advanced, Bloomberg has learned from company circles. A joint company could then be listed on a US and a European stock exchange, it is further stated. However, no decisions have been made yet.
For such a merger, Höttges would have to convince not only the governments in Berlin and Washington, but also supervisory authorities and trade unions. The German government, which holds around 28 percent of Telekom shares together with KfW (Kreditanstalt für Wiederaufbau), would lose influence. At the same time, Americans are likely to be skeptical about placing a US company definitively under German control.
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Telekom: "Speculation"
How concrete the plans actually are and whether a decision is pending is currently completely open. Telekom itself says nothing about the process: "We do not comment on such rumors and speculations in the media or on the market," a spokesperson told heise online. "This also applies in this case to the speculations surrounding Deutsche Telekom and T-Mobile US."
The stock market reacted to the rumors with a price drop for Telekom shares. The stock briefly lost 4.5 percent in value on Wednesday as the weakest performer in the Dax and is only slightly recovered on Thursday.
The shared history of Telekom and T-Mobile is one of highs and lows. With the acquisition of US carrier VoiceStream, Bonn, under CEO Ron Sommer, ventured into the USA in the summer of 2000 – only to soon regret it.
Repeated sale rumors intensified in 2011, but the already decided sale to AT&T ultimately failed due to resistance from US competition authorities. Even after Telekom took its US subsidiary public, various candidates for an acquisition were traded.
Under Höttges, who has led the Bonn-based group since 2014, Telekom continuously increased its stake in T-Mobile and now controls over half of the shares.
In the Höttges era, the merger with US mobile provider Sprint finally succeeded on the third attempt, elevating T-Mobile to the ranks of the "big three" alongside AT&T and Verizon. T-Mobile now contributes significantly to the parent company's success. The CEO is now former Telekom Deutschland boss Srini Gopalan.
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