T-Mobile US played a large role in driving parent company Deutsche Telekom’s profits this quarter, even as bids from Sprint and Iliad to buy the U.S. unit failed — and new interest from Dish Network emerged.
On August 7, the Bonn, Germany-based DT reported that its net profit increased 34.2% to $950.9 million from $708 million of the same period last year. The telecom giant said the profit was boosted in part by the effects from a U.S. spectrum swap with Verizon Wireless.
But there was also substantial growth in T-Mobile US, which exceeded 50 million customers during the second quarter. The U.S. unit also posted an adjusted earnings before interest, taxes, depreciation and amortization of $1.45 billion, up from $930 million during the same period the previous year, a 16.5% increase. Total adjusted EBITDA for the company came in at $5.9 billion up 0.3% from 2013’s second quarter.
In contrast, DT’s European earnings declined by 1.7% falling to $1.5 billion. However, the company felt its European businesses performed better this quarter than they had in the past, and DT is expecting rapid technological growth in the region in the future.
“In a nutshell: We pushed ahead with our strategy and we delivered,” said DT Chairman Tim Höttges, during a conference call.
Deutsche Telekom invested $2.94 billion across its business in the second quarter, 6.2% more than in the prior-year period in terms of cash capital expenditures before mobile spectrum. And the company invested $1.34 billion in its home market of Germany, 58.1% more than it had the previous year.
T-Mobile US plans
Despite the positive performance in the states, DT has been trying to exit the U.S. where it is No. 4 among tough competition from rivals Verizon Wireless, AT&T Mobility and Sprint.
While never officially confirmed, Sprint had reportedly made a $45 billion offer for T-Mobile US, but after a strong negative reaction by the Federal Communications Commission, the carrier decided to back off the option. Then, France’s Iliad made a surprise offer of $15 billion for T-Mobile US, which DT rejected as too low.
Further interest in T-Mobile US was expressed by Dish Network Chairman Charlie Ergen during that company’s earnings conference call.
Regardless, Höttges said on Thursday that DT is not about to rush into any deals.
“We do deals that create the greatest value,” he said. “We close deals when the time is right. … We do not allow them to dictate to us.”
Höttges said there were no offers on the table for T-Mobile US that would improve its position or value. However, he did say there were a lot of “options” in the U.S. and did not rule out the possibility of a future sale.
“I’ve been in M&A business for 20 years, and one thing you can say about it – it’s unpredictable,” Höttges said.
