Deutsche Telekom AG (DTE) Chief Executive Officer Timotheus Hoettges told directors yesterday that a sale of the T-Mobile US Inc. (TMUS) unit is less likely in the near term because of regulatory hurdles, according to two people with direct knowledge of the matter.
While selling its 67 percent holding in the fourth-largest U.S. wireless operator to SoftBank Corp. (9984) remains the preferred option, Bonn-based Deutsche Telekom is open to alternatives, said the people, asking not to be identified because the deliberations are private. One option is a disposal of some of the shares after a lockup expires in November, although that isn’t preferred because it would mean missing out on a premium from a straight sale, they said. Hoettges wasn’t more specific about the timetable of a potential sale of the T-Mobile stake, which has a market value of about $17 billion, the people said.
Shares of SoftBank rose 4.2 percent to 7,910 yen as of 1:20 p.m. in Tokyo. T-Mobile fell as much as 2.5 percent in the final minutes of trading in New York yesterday. Sprint Corp. (S), which is controlled by SoftBank, dropped as much as 2.2 percent.
“A successful acquisition could lift the firm’s presence in the U.S. and generate synergy benefits,” Hideaki Tanaka, a Tokyo-based analyst with Mitsubishi UFJ Morgan Stanley Securities Co. said in a note about SoftBank today.
Regulatory Concern
Hoettges also told the supervisory board at yesterday’s meeting, held before the company’s earnings release today, that he’s taking a long-term view in the U.S., focusing on holding onto newly acquired customers and turning T-Mobile’s pay-as-you-go clients into more profitable monthly subscribers, the people said. He also plans to argue to U.S. regulators that if industry consolidation isn’t possible, smaller carriers like T-Mobile should be enabled to acquire enough spectrum in the next auctions to help them compete more effectively, they said.
Andreas Fuchs, a Deutsche Telekom spokesman in Bonn, declined to comment on the meeting and the CEO’s comments. Hiroe Kotera, a spokeswoman for Tokyo-based SoftBank, declined to comment.
T-Mobile, the smallest among the four nationwide U.S. wireless providers, has attracted the interest of SoftBank CEO Masayoshi Son, who aims to combine it with his third-ranked Sprint unit, people familiar with the matter have said. Consolidation has been viewed with little enthusiasm by U.S. watchdogs concerned about rising prices.
Son plans to host a presentation in Washington next week to discuss “the state of America’s wireless communications industry and the competitive global landscape.” By getting bigger in the U.S. market, Sprint could offer “aggressive discounts and services,” Son said last month.
Botched Sale
T-Mobile ended yesterday little changed at $31.82, and Overland Park, Kansas-based Sprint closed down less than 1 percent at $9.12.
Deutsche Telekom is trying to avoid a repeat of the 2011 botched sale of T-Mobile to AT&T Inc., a deal that was opposed by the U.S. government. Since then, T-Mobile, based in Bellevue, Washington, became the first carrier to introduce quicker phone upgrades, payment financing, free international roaming and a $450 credit program for customers that switch service. The moves helped T-Mobile gain 2.1 million monthly customers in the past three quarters, a reversal of its 2012 performance.
In the past two months, each of the bigger rivals — Verizon Wireless, AT&T and Sprint — has introduced new plans in response to T-Mobile.
Source: Bloomberg (by )
