Reports indicate SoftBank and Sprint Chairman Masayoshi Son willing to sell stake to DT but maintain minority control in emboldened T-Mobile.
Published reports late last week indicated a long-simmering merger between T-Mobile US and Sprint could be back on the table, though this time with Deutsche Telekom as the purchaser.
According to a Reuters story, SoftBank and Sprint Chairman Masayoshi Son is said to have agreed to sell Sprint to DT’s T-Mobile US business, though would want to maintain a minority stake in the joint operations. SoftBank currently controls 83% of Sprint, while DT owns about 65% of T-Mobile US.
However, there is currently no deal on the table as T-Mobile US is unable to discuss a merger as part of anti-collusion rules connected with the recently completed 600 MHz incentive auction proceedings.
A merger between the nation’s two smallest nationwide operators has been rumored for years, gaining momentum in early 2014 when Son attempted to lobby domestic regulators to no avail. Those efforts looked to be reignited late last year following the presidential election of Republican Donald Trump; talk from Son of investing $50 billion and generating 50,000 jobs in the U.S.; and the recent leadership change at the Federal Communications Commission.
Sprint had been seen as the aggressor in any potential merger with T-Mobile US, though more recent comments from DT management has shown the German telecom giant is looking to maintain control of its surging U.S. operations.
DT CEO Tim Hoettges late last year said the company was not in the “mood of selling the business.” Those comments backed ones from earlier in the year when Hoettges said DT had no plans to sell T-Mobile US through at least the 600 MHz incentive auction proceedings.
“We are now open to how we could create something beyond our execution, which is creating value,” said Hoettges at the Morgan Stanley TMT Conference in Barcelona, Spain, according to Reuters. “We compare a lot of variables. With Trump, the regulatory environment might change. Everybody is expecting this. At least the chance is bigger then it was under the Democrats.”
Hoettges sang a similar tune during DT’s third-quarter conference call with investors when he stated: “Look, we like the U.S. business. We like our management there. We like our story there and the track record, and we do not see that there is any weakness on the overall story. So is there any plans with regard to the change of our ownership? No, it’s not. But we want to be open-minded to further consolidation steps in that market, what might come up there in the next years and therefore we are not changing our kingmaker strategy there. The U.S. market is quite attractive and the outlook is quite encouraging and the share price is reflecting this. This is the right market to be in.”
DT has a long history of indecision in terms of its U.S. asset following its initial $50 billion acquisition of VoiceStream Wireless in 2001. In 2013, DT managed to dilute its stake in T-Mobile US through a complicated acquisition of MetroPCS, the previous romance with Sprint and a rumored fling with France’s Iliad.
A combined T-Mobile US and Sprint would be nearly on par with larger rivals Verizon Wireless and AT&T Mobility in terms of domestic market share, and depending on any potential network or spectrum divestitures required to seal a deal would have a formidable spectrum position in support of planned “5G” network deployments.
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