Bonn, Germany (4E) – After two failed previous bids for T-Mobile, Deutsche Telekom is now open to unload its shareholdings in the wireless carrier. Deutsche Telekom is the majority owner of T-Mobile and has pegged the price of its shareholdings at USD35 per share.
The price pegged was confirmed by anonymous sources, and is not far from the offer of French telecoms firm Iliad, who offered to buy the whole interest at USD33 per share.
The bid from Iliad was rejected. T-Mobile, Iliad and Deutsche Telekom representatives did not provide a comment when sought.
The latest share price for T-Mobile was recently at USD30.04 up by two percent.
Prior to this announcement, there were earlier discussions as to a possible merger with Sprint earlier this month due to anti-trust issues. US regulators had highlighted the issues with the merger of the third and fourth largest wireless operators in the United States. This deal would would have put T-Mobile’s share valuation at USD40 per share. Thus to avoid a protracted regulatory review, the decision was made to forego this offer.
The second offer was from Iliad, which was for 56.6% in T-Mobile worth at USD33 per share totaling USD15 billion. This was also rejected by T-Mobile but there are unconfirmed reports that Iliad would be forging partnerships with Google and Microsoft to increase the offer.
This valuation also offers an improved bid from other potential suitors such as Dish Network Corp. Under the aegis of current CEO John Legere, T-Mobile’s market has expanded with the addition of millions of customers. T-Mobile must compete with other wireless carriers such as AT&T Inc and Verizon Communications Inc in spectrum auctions. There is also a need to spend for constant upgrading of its network to compete with the ever changing technology.
In an interview with GeekWire, Legere made it clear that a merger is essential to allow the company to grow and succeed in the long run. He said, “I know what we’ve done in the last year and a half is a small inkling of what real competition is like. In order to keep it going, there’s things we need in the long term – sale, spectrum etc. And one way to get those is consolidation.”
Overall, Deutsche Telekom receives a third of its sales and one fifth of its core profit from the US market. Previously, Deutsche Telekom CEO Timotheus Hoettges stated that an acceptable offer would be higher than the standalone price of T-Mobile.
Many pundits have identified the best partner for T-Mobile is Dish Mobile, which is owned by its Chairman Charlie Ergen. Dish’s USD26 billion worth of assets in terms of airwaves and national pay-TV service for the carrier would become available to Deutsche Telekom through the T-Mobile partnership.
T-Mobile’s shares have decreased by 13% since its high of USD34.86 last May 29, 2014 while the same shares increased by 4% in the S&P 500 during the same period. As for Deutsche Telekom, its US listed stock price has declined by 8.7% since May 29, 2014.