When Tim Hotges talks about America, the president of Deutsche Telekom likes to adopt an official tone. “We are suppliers to the Western world, with two stable pillars,” Hotgs said before the last public meeting. As Telekom sells not only telephony and internet in Europe but also with its subsidiary T-Mobile, it is also one of the three largest mobile telecom providers in the USA. Last year, the Boone-based group generated 60 percent of its sales and profits in America.
But overseas growth has a problem: Telekom has not yet secured permanent control of the US subsidiary. Two years ago, T-Mobile merged with rival Sprint, and since then Telekom has owned less than half of the shares in the combined company. Only because Telekom has secured the majority of voting rights for a few years is it allowed to fully report T-Mobile and Sprint transactions on its balance sheet.
But Telekom is now taking the next step toward long-term control: It is buying more shares in T-Mobile US for more than €2 billion, the group announced on Wednesday. This increases their stake in the US business from 46.7 percent to 48.4 percent. Of course, Höttges isn’t satisfied with that: “We’ll be back soon with 51%, the secure controlling majority,” the CEO announced at a shareholder meeting.
The opportunity to top up came just in time for Telekom
Telekom can buy T-Mobile shares of Japan’s Softbank Group on relatively favorable terms. Softbank was the majority owner of the merger partner’s Sprint, and as such holds shares in the new joint venture T-Mobile. Softbank has given Telekom options so that the Bonn-based company can buy more T-Mobile shares.
The opportunity to raise came cheap for Telekom: the group closed its mobile business two weeks ago sold in the netherlands And I got about four billion euros for it. Now he’s spending at least some of that money in America. On the stock exchange, Telekom temporarily rose one percent in value on Wednesday.
If network operators merge, as in the case of T-Mobile and Sprint, they can avoid a lot of double spending: for example, they can combine antenna sites and save on management. On the other hand, US mobile customers have had fewer options since the merger. The authorities considered the merger at length and eventually approved it, subject to conditions. For example, T-Mobile and Sprint had to give up part of their business and their mobile frequencies to competitors.
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