Deutsche Telekom CEO wants T-Mobile to merge with Sprint, not Dish

Deutsche Telekom CEO wants T-Mobile to merge with Sprint, not Dish
Even though Deutsche Telekom owns 66% of T-Mobile's shares, the carrier does not have control of the latter's Board. But that hasn't prevented Deutsche Telekom CEO Timotheus Höttges from discussing his plans for the fourth largest carrier in the U.S. The executive allegedly opened up to investors at an RBC Capital road show in Toronto last week. At the event, Höttges said that more value would be created by a T-Mobile-Sprint combination than by the merger of T-Mobile with Dish Network. Last week, word leaked out that Dish and T-Mobile are negotiating a merger of the two companies.

According to a source who spoke with the New York Post, Höttges has an end game in mind for T-Mobile and that calls for the carrier to be sold to cable giant Comcast. The Deutsche Telekom chief is concerned that a deal with satellite content provider Dish would end up precluding T-Mobile from being bought by Comcast. Certainly the regulatory issues involved in a merger between a large satellite provider and a giant cable company would be immense, and there would be plenty of reasons for the FCC and DOJ to block such a deal.

According to the unnamed source, Höttges feels that a deal with Sprint could pump up T-Mobile's size, especially after the FCC auctions off valuable low-frequency spectrum in 2016. The Deutsche Telekom executive is said to believe that increasing the size of T-Mobile would make it a more attractive merger candidate for Comcast.

The problem there, is that Sprint and T-Mobile spent months discussing and strategizing a merger last year that was blocked by U.S. regulatory agencies before it was ever agreed to. The FCC and the FTC both said that a merger between the third and fourth largest U.S. mobile carriers would not pass the smell test as far as they were concerned. With the lack of regulatory support, Sprint backed off. That led to an eventually abandoned takeover bid from French carrier Iliad, which was trying to buy T-Mobile with a low-bid. Deutsche Telekom's Höttges said that with T-Mobile producing $1 billion in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) annually, the company should receive a premium price in any sale.

source: NewYorkPost via FierceWireless

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