Breaking: Deutsche Telekom and T-Mobile discuss combining in a potential record-setting merger
Deutsche Telekom and T-Mobile, if combined, would be the most valuable wireless carrier in the world.
T-Mobile talks merger with Deutsche Telekom. | Image by PhoneArena
In what could result in the largest public Merger & Acquisition (M&A) deal in history, Bloomberg says that Deutsche Telekom is thinking about combining with T-Mobile. The German carrier is currently the majority stockholder of T-Mobile owning 53.7% of the company.
Deutsche Telekom is considering a merger with T-Mobile
Today's report says that Deutsche Telekom has been kicking around the idea that it would create a new holding company that would offer shares in exchange for the stock of Deutsche Telekom and T-Mobile. Because the information given to Bloomberg is private, the sources requested that their identities not be revealed.
The combined Deutsche Telekom and T-Mobile could get listed on a U.S. exchange and on a major European exchange. Because the talks are at a preliminary stage, there are many details that have yet to be ironed out.
A deal would create the most valuable wireless provider
One important thing to consider is that any deal could require political support to get to the finish line. And even though talks seem to be progressing this time, for years Deutsche Telekom and T-Mobile have held on-and-off discussions regarding a possible merger, so there is no guarantee that the talks wouldn't end with another impasse.
The German government and state-owned lender KfW together own 28% of Deutsche Telekom. This allows them to have a say in whether a deal gets done and what the final form of the deal will look like.
Traders heard that something big was in the wind
Rumors that something was in the wind hit T-Mobile shares at 2 PM EDT today when the stock soared briefly from $196.65 to $205.09 in just 5 minutes. By the end of the regular trading day, T-Mobile closed at $195.39 falling $2.97 or 1.5%. Over the last year, T-Mobile's stock dropped 22% while Deutsche Telekom's shares lost 10% of their value during the same time period.
Deutsche Telekom is the majority T-Mobile stockholder with a 53.7% stake. | Image by Deutsche Telekom
T-Mobile's Price to Earnings ratio (PE) is 20.11 compared to 14.6 for Deutsche Telekom. T-Mobile is responsible for the bulk of Deutsche Telekom's profits. A merger would form the highest valued wireless carrier in the world based on market capitalization, topping the current leader, China Mobile Ltd., which is currently valued at $235 billion.
Current T-Mobile CEO Gopalan was once CEO of Deutsche Telekom
T-Mobile is currently valued at $215.3 billion while Deutsche Telekom has a market cap of €141 billion ($166 billion). Bloomberg says that the combined company would probably be incorporated outside Germany in a European jurisdiction.
Srini Gopalan, who replaced Mike Sievert as the carrier's CEO on November 1, was CEO of Deutsche Telekom before joining T-Mobile as chief operating officer (COO) in March 2025. This could be why Gopalan was picked to replace Sievert.
This seems like a crazy time to discuss such a large and complicated merger as T-Mobile is in the midst of a major transition to a digital Mobile Network Operator (MNO). All transactions, such as phone upgrades, the purchase of new lines and accessories, and even paying one's monthly invoice have to be done using the T-Life app.
T-Mobile's M&A history
Eventually, stores will close, reps will be laid off and the headcount reduced (this has already started). Without leases to pay or commissions to pass out, more revenue should drop to the bottom line potentially making the stock rise.
However, customers and reps have not been happy as the T-Life app has been buggy at times. Even stranger, customers coming in with a broken phone are sometimes not being allowed to buy a new one since they lack the ability to access the app.
T-Mobile has quite an M&A history:
- Deal to be acquired by AT&T in 2011 for $39 billion failed.
- Acquired MVNO MetroPCS in 2013.
- Bought Sprint in massive $26 billion deal to get its hand on Sprint's 2.5GHz mid-band spectrum for 5G.
- Paid $1.35 billion for MVNO Mint Mobile in 2024.
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