Deutsche Telekom transfers T-Mobile US stake to holding company in the Netherlands [Update: Sprint gets bank financing proposals ]

Deutsche Telekom

Reuters reports today that Deutsche Telekom has transferred its controlling stake in T-Mobile US to a holding company in theNetherlands. DT owns around 67% of the #4 US carrier, and this move will do nothing to kill rumors of a possible buyout.

Rumors have persisted for a few months now that Sprint could be lining up a buyout bid for T-Mobile. This particular merger/takeover is allegedly being fueled by Softbank’s CEO, the same man who pushed through the deal to buy-out Sprint earlier in the year. Deutsche Telekom denies these reports, stating that this move to a holding company should be viewed only as a way of simplifying its organization.

However, it is hard not to speculate. Analyst Walter Piecyk of BTIG states that “The Netherlands offers favorable tax treatment on asset sales.” As a comparison, Vodafone Group still holds its 45% stake in Verizon Wireless in the Netherlands. The idea being to have a “very tax-efficient transaction” once VZW completes its buy-out of Voda’s stake.

Of course, there are obstacles in regards to the rumored Sprint buyout. One of which is that it could never turn in to reality. The other is the regulatory bodies. They may have reservations about two of America’s 4 major carriers merging and becoming one company. On the other hand, we’ve also read reports that Softbank can’t afford for the deal to go sour, as it doesn’t have the cash to pay any compensation to T-Mobile if the deal isn’t completed.

What do you think? Can this deal go through? Are DT’s moves just another indication that it wants to sell T-Mobile, and isn’t too fussed who to?

[UPDATE: A snippet of information to add from Yahoo Finance/WSJ. Looks like Sprint/Softbank is preparing to get the cash together to take control of Tmo: 

Sprint (S) now has confidence that a deal for T-Mobile (TMUS) can be funded, as at least two banks have come forth with proposals on how to finance a takeover of its smaller rival, says the Wall Street Journal. Terms of the proposals have not been worked out but sources say that the proposals envision a total "enterprise value" of about $50B for the deal, which would be comprised of $31B for T-Mobile and another $20B to backstop a refinancing of existing T-Mobile debt, added the Wall Street Journal.

Although rumors aren't a guarantee that any deal is happening (or not happening), the saying "no smoke without fire" seems apt at this point.]

Via: Reuters
Update via: Yahoo!

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  • jj

    They want us now that we are killing the industry :) … let them want all they want…

    • ha

      us? im sorry i wasnt told the cofounder of tmobile was going to be joining us in the discussion board

      • Drew Vallejo

        Sad day when the people that pay a company feel like they are actually a part of it. Truth is, DT knows that no matter how big T-mobiles subscriber gains are, they still are racking up less profit all around.Not to mention, personal accounts are going to mean sh*t when looking at the whole picture. This technology company has to to look much further than smartphones for growth. Verizon and At&t are breaking ground on so many other areas that will eventually take their businesses to another level, while Legere is trying to Uncarrier laptop sticks. Either Softbank will gobble up T-mobile or Dish will. We all know Uncarrier may stay but forward momentum will cease. And the great consolidation will begin.

        • KlausWillSeeYouNow

          Clearly you’ve never heard of brand loyalty.

          “Breaking ground…” HA! The only thing AT&T and Verizon are breaking is their customer’s pocketbooks. And trust.

          Any more ridiculous and irrational news?

      • jj

        Um. Yes. Us. And I’m not a “Co founder” but have been deemed so by John legere himself. He deemed us all Co founders and issued founders grants to the employees who stuck it out through the good and the bad. The ones like me who take pride in a company with a new vision. :) why so cynical “guest”?

        • KlausWillSeeYouNow

          He probably has Sprint.

  • IRIE4IPIEIR

    I’m so tired of this Sprint crud, they are lousy and T-Mobile will be in trouble if they are bought out by an inferior competitor.

  • Bklynman

    I have friends in NYC,NJ,who has Stink,have no problem with them,does anyone else know people from NY,NJ,who has Stink,is happy with them.

  • No Sprint

    No Sprint, not another wrench T-Mobile has to deal with. T-Mobile has made significant progress and helping to change the industry for the better. With the merger, progress and innovation will slow while management changes and T-Mobile will have to focus their time and man power on integrating the two companies and their infrastructure which will screw everyone up and slow down if not block progress T-Mobile has been doing so far. It’s going to be a huge mess such as the United and Continental which are still having issues with merging their systems together…

  • izick

    You guys are looking at this from the lens of Sprint and not Softbank. Sprint Corp. has very little to do with this, and Softbank is like the T-Mobile of Japan.

    I predict that if a merger does happen, the brands remain separate. Sprint focuses on business and T-Mobile on consumer. The CEO of Softbank has already condemned CDMA for the most part, so all that spectrum holding would come over to the T-Mobile side of things. LTE Advanced could have 1GHz deployment with all the spectrum the combined company holds.

    The best part is that the company could work out a deal with FCC to provide unlimited data access for life, a max price for voice messaging services, or other competitive centered deals in exchange for approval.

    One thing is for sure, if a brand were to be lost in a deal with Softbank, it’d be the Sprint brand, ▪T▪▪▪Mobile▪/Telekom has much higher international recognition.

    • philyew

      The lens that the FTC, DOJ and FCC will be looking through is that of common ownership, resulting market concentration, and its impact on fair competition. It doesn’t matter that the deal is contemplated by Softbank, the ownership issues are what matter.

      It may be possible for a commitment to be entered into which could preserve the competitive independence of the two carriers and maintain the impetus of the Uncarrier philosophy, but frankly Softbank would be nuts to enter into it. Even TMUS have the current option of abandoning the Uncarrier approach and modeling themselves on traditional lines, so a deal with the federal authorities guaranteeing that Uncarrier would never change would be unthinkable.

      As far as continuity of branding is concerned, how would the TM brand work in the USA after ownership is completely separated from that of the rest of brand internationally? If DT follows its preferred option (according to today’s article) and completes a 100% sell-out, they will have to continue owning all the marks and brand identifiers (Magenta etc) in order to be able to maintain operating continuity in Europe, and would have no ongoing interest in the performance and image of the US entity.

      Since DT will have no enduring interest here, but have absolute control of the marks, what – other than price – would give them any reason to enter the difficult world of sharing branding? And why, when Softbank have a larger brand with Sprint here in the US market, would they pay a premium price to DT for shared ownership?

      • izick

        This isn’t always true as Virgin Mobile USA sold its branding rights to Sprint Nextel. They still operate Virgin Mobile in other countries. How would this be any different?

        • philyew

          But Sprint Nextel didn’t become Virgin Mobile as a result of the deal, did they?

          Your comment to which I was responding said: “One thing is for sure, if a brand were to be lost in a deal with Softbank, it’d be the Sprint brand.”

          Virgin Mobile isn’t a communications company but is rather a communications brand licensed to independent operators in eight different markets.

          As an MVNO, Virgin Mobile USA would have no interest in expanding into overseas markets, so there would never likely be any conflict of interests overseas between Sprint and a local brand licensee. However, as AT&T are now said to be looking at expanding their interests in Europe, we couldn’t preclude the possibility that an organization of similar size built from Sprint and TM might have similar ambitions at some distant time in the future.

          It might be possible that Softbank could negotiate a temporary right from DT to continue operating a TM division during a transition period, but my points remain valid, I think.

    • KlausWillSeeYouNow

      …international recognition with companies owned by DT. The stylized “T-” is Deutsche Telekom’s logo. They would absolutely not allow SoftBank or anyone to run a business in their name. If one this is absolutely certain, it is that T-Mobile would not be called T-Mobile anymore. It would be called Sprint.

      You know, Sprint really isn’t a horrible word or name. It’s cool-sounding… it’s just that their network sucks.

      • z

        Incorrect.
        Just because they “own” the name does not mean a deal cannot be worked to for use of the brand name in America.

        • KlausWillSeeYouNow

          I didn’t say it couldn’t. I just said that SoftBank would opt for it to be called Sprint, and DT would happy oblige.

  • thepanttherlady

    Enough both of You!