Deutsche Telekom to offload T-Mobile US shares

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German incumbent Deutsche Telekom plans to reduce its ownership of T-Mobile US, even though it only became majority shareholder in the operation earlier this year.

DT has yet to decide how many shares it plans to offload, but insists the sale will not jeopardise its majority position. The process is due to kick off next year.

T-Mobile used to be a wholly-owned subsidiary of Deutsche Telekom, once upon a time, but the acquisition of MetroPCS, followed by the merger with Sprint, diluted DT’s holding to 43%.

In late 2021, DT announced its intention to regain majority control of T-Mobile, agreeing a share-swap deal with Sprint parent Softbank, partly funded by the €5 billion sale of its T-Mobile Netherlands operation. T-Mobile is by some margin the single biggest profit-generator in Deutsche Telekom Group, and the telco wanted a bigger piece of the pie to help pay for its FTTH deployment in Germany.

At April’s AGM, DT chief exec Tim Höttges confirmed that he had achieved his aim, his company now controlling 50.2% of its US subsidiary.

Since then, DT’s stake has increased slightly to 51.4 percent as of mid-July. Reason being, publicly-listed T-Mobile is in the midst of a $14 billion share buyback programme, and DT has not sold any of its shares.

Furthermore, T-Mobile this week announced it will buy back another $19 billion worth of shares between the fourth quarter of 2023 and the end of 2024.

“As such, Deutsche Telekom remains on course for a sustainable and stable majority in its US subsidiary, allowing Deutsche Telekom to maintain its majority equity stake in T-Mobile US if new shares of T-Mobile US are issued to Softbank in Japan, which had been agreed as part of the merger with Sprint in the event of the T-Mobile US share price achieving a certain defined price,” said a press release from DT.

In addition to the buyback, T-Mobile has also announced a €3.75 billion dividend, which will be paid quarterly from the beginning of October until the end of next year. Over the next five quarters, DT expects to receive approximately $1.8 billion after taxes.

There is no word on what DT has in mind for the proceeds, but there is room to speculate.

It is still working hard towards passing 25-30 million households with FTTH by 2030. On the mobile side of things, DT’s 5G network now covers 95% of Germany’s population, and it revealed recently more than 10,000 5G sites – around 40% of the total – are connected by 10-Gbps fibre, which is impressive but shows there is plenty more upgrading in the offing.

All the while this is going on, DT is keen to maintain good financial health. It is aiming for a net debt to adjusted EBITDA ratio of 2.25 to 2.75 by the end of 2024 – no mean feat during the midst of aggressive fibre and 5G deployments.


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