A new report claims DT will not look to sell its stake in T-Mobile during the upcoming 600 MHz spectrum auction
With one month to go before the Federal Communications Commission is set to begin its highly anticipated 600 MHz spectrum auction proceedings, T-Mobile US parent company Deutsche Telekom reportedly said it has no plans to sell its U.S. operations during the process.
According to Reuters, and citing two sources, DT said stringent rules surrounding the auction will prevent any talk related to a possible sale of T-Mobile US. Auction rules stipulate participants are not allowed to discuss bidding activity or financial dealings related to control of entities bidding in the proceedings.
“During that period, there will be no [merger and acquisition] activity in the U.S. telecoms sector,” Reuters quoted one person familiar with the situation.
The spectrum auction, which is scheduled to begin on March 29, is expected to draw significant interest from domestic mobile operators looking to bolster their spectrum portfolios with attractive low-band spectrum licenses. T-Mobile US is predicted by some to have as much as $10 billion available to bid on spectrum, with CEO John Legere publicly stating the carrier’s plans to bid aggressively in the auction.
“Let’s be clear, we are showing up, we are going to be very aggressive, we do have the balance sheet and we’re preparing for it, and we will scoop up as much as humanly possible,” Legere said. “It will be the biggest mistake any of them ever made, if they don’t show up.”
T-Mobile US’ necessary level of aggressiveness remains in question following Sprint’s announcement it would not be participating in the proceedings. Sprint was seen as a potential bidding rival for the 30 megahertz of spectrum set aside by regulators outside the reach of telecom operators that currently hold significant chunks of sub-1 GHz spectrum licenses.
T-Mobile US earlier last year committed just under $1.78 billion in the FCC’s AWS-3 auction for spectrum licenses in the 1.7/2.1 GHz band adjacent to its current AWS-1 spectrum holdings. The carrier could also be a player for AWS-3 licenses returned to the FCC by Dish Network and its designated entity bidding partners after they were denied auction bidding credits.
DT, which owns 65% of T-Mobile US, has for years been seeking a potential buyer for its U.S. operations. Speaking at DT’s annual shareholders meeting last year, CEO Tim Hoettges explained that despite recent improvements across its U.S. operations, DT has a “duty to go on improving the return on T-Mobile US,” adding that “if we can find a partner who will help us to do so, we will obviously consider it.”
DT initially paid more than $50 billion when it acquired VoiceStream Wireless in 2001. In 2013, DT managed to dilute its stake in T-Mobile US through a complicated acquisition of MetroPCS, and in 2014 nearly sold all of its stake
to SoftBank and in a separate deal a portion to France’s Iliad.
DT in 2011 was close to selling its T-Mobile US stake to AT&T for $39 billion, before the deal was quashed by U.S. regulators for competitive reasons.
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