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Despite denial, move by Deutsche Telekom hints at imminent sale of T-Mobile US

Posted: , by Alan F.

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Despite denial, move by Deutsche Telekom hints at imminent sale of T-Mobile US
Germany's Deutsche Telekom is the majority owner of T-Mobile US, and amid rumors that SoftBank controlled Sprint is about to buy the fourth largest U.S. carrier, Deutsche Telekom made a move hinting of an imminent deal. The telecommunications giant transferred its 67% ownership of T-Mobile US from a German holding company to a Dutch holding company.

But Deutsche Telekom said on Thursday that the move was part of an internal restructuring and said that nothing more should be read into the action it made. The company had alerted U.S. regulators to the shift on Wednesday. Meanwhile, a report published on Friday by the Wall Street Journal stated that at least two banks have approached Sprint, each willing to offer as much as $50 billion in financing, to be used toward the purchase of T-Mobile.

If ever a carrier was deemed to be red hot, T-Mobile would be it. With a number of consumer-friendly innovations that have been copied by the rest of the industry (albeit in diluted fashion), the once sleepy afterthought has become the darling of the industry, led by CEO John Legere. The latter doesn't look like a CEO with his longish hair and casual attire.More importantly, Legere doesn't act like a CEO as he often directs his laser like wit at the competition, usually AT&T.

As for the transfer, BTIG analyst Walter Piecyk says that Deutsche Telekom could have moved its T-Mobile holdings for tax purposes. The analyst says that the Netherlands offers favorable tax treatment on asset sales. And while Piecyk doesn't expect U.S. regulators to allow the sale of T-Mobile, the move made by Deutsche Telekom still has the look of an imminent deal, even with the latter's denial. It would appear as though Deutsche Telekom moved its T-Mobile US assets so that it will incur favorable tax treatment when it sells its stake in the stateside carrier.
 
source: Reuters

15 Comments
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posted on 17 Jan 2014, 05:10

1. reckless562 (Posts: 702; Member since: 09 Sep 2013)


WOOOP!!! There it iisss !!!

posted on 17 Jan 2014, 05:52 2

2. papss (unregistered)


I would hope the FCC would bloom such a move. I'm not sure how I feel about an Asian company buying more telecom property in the US

posted on 17 Jan 2014, 09:52 2

6. Droid_X_Doug (Posts: 5729; Member since: 22 Dec 2010)


U.S. DoJ is an even higher hurdle than FCC. With another $3 B in breakup fees from a failed SoftBank attempt, T-Mo would be looking pretty attractive as a standalone company. DT could offer T-Mo as an IPO opportunity. An IPO would yield the same result for DT as a sale, so same need for tax planning by DT.

Magic 8 Ball says IPO is in T-Mo's future.

posted on 17 Jan 2014, 10:04 3

8. VZWuser76 (Posts: 1352; Member since: 04 Mar 2010)


With all the money we owe China, they could potentially own most of the US if we default on the loan.

posted on 17 Jan 2014, 12:22

12. JEverettnow (Posts: 190; Member since: 11 Mar 2013)


Most of U.S. debt is owed to ourselves. China holds a very small portion of our debt.

posted on 17 Jan 2014, 08:16 3

3. E.S.1 (Posts: 289; Member since: 14 Sep 2013)


Maybe I should wait to switch from At&t to T-Mobile....

posted on 17 Jan 2014, 09:14 2

4. joseram695 (Posts: 45; Member since: 28 May 2012)


I hope us regulators tell softbank to get lost.

posted on 17 Jan 2014, 09:53 1

7. Droid_X_Doug (Posts: 5729; Member since: 22 Dec 2010)


They will if SoftBank takes a run at T-Mo.

posted on 17 Jan 2014, 09:41 1

5. Doakie (Posts: 1240; Member since: 06 May 2009)


Damn Softbank should have just bought T-Mobile right off the bat instead of buying Sprint first. I have no idea how anyone thinks this deal will pass the regulatory bodies because the AT&T deal got shut down due to fear of less competition in the wireless industry. Since then T-Mobile purchased Metro PCS, and AT&T is buying Cricket. And Sprint bought Clear. Pretty soon the only carrier left to be in a FAR distant fourth place will be US Cellular. If the US regulatory bodies allow this to go through I'm going to be totally let down.

posted on 17 Jan 2014, 10:24 1

9. Augustine (Posts: 708; Member since: 28 Sep 2013)


Though Sprint has a revenue almost twice as large a T-mobile's, it sports a loss while the latter, a 35% net profit margin. I don't know what's going on with a seemingly weaker company acquiring a better managed one, usually it's the other way around. Something similar is happening with lesser cable operator Charter bidding for the larger Time Warner.

On another note, at least SoftBank runs a GSM network in Japan, hinting that perhaps this is the technology that would be favored were the acquisition completed. Besides, methinks that the FTC would condition the acquisition to keeping GSM, lest AT&T become the sole such carrier.

posted on 17 Jan 2014, 12:25

13. JEverettnow (Posts: 190; Member since: 11 Mar 2013)


Everything T-Mobile is doing has only been recent. We have no idea what the long term results of their actions will be. Maybe they gain a bunch of subscribers, but people start defaulting on the phone payments or canceling due to lack of coverage. Ahhh, the possibilities.

posted on 17 Jan 2014, 10:35 2

10. axllebeer (Posts: 265; Member since: 05 Apr 2011)


If this happens, then Sprint needs to transition to GSM technology for all future handsets. Many of Sprints phones now are world phones, so if they push PRL update or whatever, they can run on T-mo now.
Sprint, if you get your way, drop CDMA, go GSM, and start supporting just a fewer technologies so you can get your ducks in a row, and stop the fragmentation. You are already out there working on the towers to bring us LTE, so do that too while you are out there.

posted on 17 Jan 2014, 11:00 1

11. phonetekmek (Posts: 70; Member since: 04 Oct 2013)


I predict it will get the approval needed. I think that they will make a valid arguement that the only way to compete against the big 2 is to join together. You have DT that wants out so bad its not even funny so they will make concessions needed. And Softbank already said they will not do any of the fees that AT&T paid if it fails to go through. So the fact that it is still progressing must mean that DT has agreed to not ask for those this time. That corporate umbrella would be huge merging the Sprint, T-Mobile, Metro, Virgin, Boost, and any other MVNO's.I would imagine merging some brands and keeping others seperate. I just wonder who runs he new company Dan or John? Dan used to be the rebel but never to the exstent John is.

posted on 18 Jan 2014, 21:42

14. DigitalJedi_X2 (banned) (Posts: 346; Member since: 30 Jan 2012)


I don't think this will go through. I think for the exact reason that Softbank already has Sprint and with all of the innovations T-Mobile is doing in wireless, the DOJ will shut this down. Sprint can barely run its own network. I left Sprint for T-Mobile. Sprints 3G is akin to edge speeds and Sprints 4G LTE is akin to 3G speeds. Coupled with the fact that Dan Hesse seems clueless, I'm Praying this deal, if it happens, doesn't go through.

posted on 19 Jan 2014, 09:27

15. sianto (Posts: 65; Member since: 11 Dec 2013)


This isn't anything about a sale, it's just business, the Netherlands asks less taxes, so that's the whole point. Even Google does it!

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