T-Mobile value back up to AT&T deal level according to DT chief


Deutsche Telekom’s newly appointed CEO, Timotheus Hoettges took part in an interview with Bloomberg today in which he discussed a handful of topics. For the most part, Hoettges speaks of T-Mobile’s achievements in the US market. Stating that he is “fairly proud — together with all those involved — of what we created there.” 

Back in 2011, AT&T had attempted to buy out T-Mobile for around $39 billion from Deutsche Telekom. After the deal went south, Tmo’s place in the US market was uncertain and its value dropped considerably. As a plus-point of the buyout falling through, T-Mobile got around $7 billion in cash and spectrum as compensation and has used that to good effect. The company also merged with MetroPCS Communications. This enabled the company to expand its coverage and launch a LTE network. The lightning-quick expansion of LTE and the market-changing Uncarrier plans had returned T-Mobile back to the value it was at when AT&T tried to purchase it back in 2011.

“We already have increased the value to what it was at the sale,” Hoettges said in Munich yesterday, where he was attending the annual DLD conference for entrepreneurs and technology companies. “That means with 67 percent of a company that’s worth $42 billion, we’re already back at the value of the AT&T deal.”

As for the big question regarding a sale of DT’s controlling share in T-Mobile US to Softbank, Hoettges refused to comment.

According to Bloomberg’s own sources, DT is wanting an all-cash offer for T-Mobile, if any purchase is going to happen. We’ve also read previously that Softbank is trying to raise around $20 billion in financing from the same banks it used to fund the Sprint purchase last year. The only issue here – of course – is that $20 billion will no longer be enough to secure the 67% stake in T-Mobile US currently owned by Deutsche Telekom.

Now, DT could look at this opportunity in two different ways. 1) T-Mobile US is on a high, and at its highest market value in two years. There’s never been a better time to sell. 2) T-Mobile has just launched one of its most aggressive phases of Uncarrier so far, paying of early termination fees of anyone who wants to switch. It’s clearly going to continue growing in value and popularity. Instead of being an unsuccessful string to Deutsche Telekom’s bow, it’s now the feather in its cap. Why get rid of its most promising property?

Apart from struggling to get the cash together for the deal, Softbank will also have to deal with the American governing bodies who may resist any deal to merge two of the “big 4″ carriers. Reducing down to 3 carriers would alter the competitive landscape of the US telecommunications industry. Softbank can’t afford for the deal to go south. It has a lot of debt following the Sprint acquisition.

With T-Mobile being so valuable, it would certainly seem like there are more obstacles to any deal going through than there was a few months back.

Via: Bloomberg 

Tags: , , ,