Deutsche Telekom in talks to sell T-Mobile USA to Sprint, report says

9 Mar 2011

According to Bloomberg, German telecoms group Deutsche Telekom has entered into talks to sell a significant stake in its T-Mobile USA unit to Sprint Nextel in exchange for a major stake in the combined entity. Citing people with ‘knowledge of the matter’, the report says that the companies have yet to agree on a valuation of T-Mobile USA, which reported a drop in profit in 4Q10. It is believed that Deutsche Telekom values the cellco at around USD25 billion, whilst Sprint envisages a price-tag of USD15 billion to USD20 billion, based on the cellco’s reduced earnings and recent customer losses. It is believed that talks have centred on Deutsche Telekom owning a 50% stake in a combined T-Mobile USA/Sprint entity.

In an emailed statement, Deutsche Telekom chief financial officer Timotheus Hoettges told Bloomberg: ‘In general, all options are open in the US – the sale of the whole business or of parts. We’re flexibly positioned,we’re not under pressure. We want the best solution’. According to TeleGeography’s GlobalComms Database, Sprint and T-Mobile USA were the third- and fourth-largest mobile phone operators in the United States by subscribers at end-December 2010, with 16.9% and 11.4% market shares respectively. A merger of their cellular assets would not be sufficient to topple market leaders AT&T (32.4%) and Verizon (31.9%).

United States, Deutsche Telekom (DT), Sprint Corporation (now part of T-Mobile US), T-Mobile US