A future move to combine T-Mobile and Deutsche Telekom into one larger company may sound ambitious on paper, but there is a major issue hanging over the idea. The biggest problem is not T-Mobile’s performance or Deutsche Telekom’s interest in getting closer to its U.S. business. It is Deutsche Telekom’s continuing reliance on Huawei equipment in Germany, something that could raise serious concerns if a merger ever faced review in the United States.
According to PhoneArena, Deutsche Telekom CEO Timotheus Höttges has discussed the possibility of a combined business valued at about $260 billion, while also making it clear that T-Mobile has become the main engine behind Deutsche Telekom’s success over the past decade. The report says T-Mobile now accounts for nearly two-thirds of the group’s revenue and about 67% of its basic earnings, which helps explain why Deutsche Telekom would want more direct control and a bigger stake in that growth story.
The trouble is that Deutsche Telekom still depends heavily on Huawei for its mobile network in Germany. Huawei remains the company’s main supplier there, while Ericsson and Nokia together make up less than 40% of its 5G setup. That matters because Huawei has long been viewed by U.S. authorities as a national security risk, and any deal that puts Deutsche Telekom’s network relationships under a brighter U.S. spotlight could invite tougher scrutiny.
The report also notes that Deutsche Telekom is still spending billions of euros on network modernization over the next two years, including upgrades tied to Huawei equipment. That could make it even harder to argue that Huawei is only a minor or temporary part of the company’s infrastructure. In simple terms, if Deutsche Telekom wants a cleaner path for any major U.S.-linked merger, its Huawei exposure could become a very real headache.
Höttges has reportedly defended the use of Huawei gear and argued that cutting off companies like Huawei can hurt industries that depend on trade with China. But even if that argument plays in some circles, it may not carry much weight in Washington. For now, the bigger takeaway for T-Mobile readers is that any dream of a massive transatlantic merger is far from simple, and Deutsche Telekom’s Huawei ties could be one of the biggest reasons it never gets off the ground.
Source: PhoneArena