T-Mobile shareholders and US government reportedly discourage a change of hands

In April, reports surfaced that T-Mobile and its German parent company Deutsche Telekom (DT) were considering a merger. T-Mobile's US executives have reportedly told DT to back off.

Nobody in the US wants it

Some of T-Mobile's minority shareholders, primarily large institutional investors, don't want the merger to go through because DT is growing much slower than T-Mobile, per Semafor.

Given this resistance, any vote to approve the deal is unlikely to pass.

Meanwhile, US government officials have told T-Mobile that regulators might demand guarantees that T-Mobile's revenue remains stateside. T-Mobile shelled out over $2 billion in dividends to DT last year alone.

Faced with the pushback from both investors and Washington, T-Mobile’s US leadership pulled its support for the deal, which would have valued the combined giant at $300 billion.

What should T-Mobile do?

It made little sense for T-Mobile

DT holds a controlling 53% stake in T-Mobile. Back in the day, the German company acquired VoiceStream Wireless, which later became T-Mobile.

A decade later, a struggling T-Mobile had become a headache for DT. After an unsuccessful attempt to sell the company to AT&T in 2011, DT turned things around, catapulting T-Mobile into one of the most valuable providers on the planet.

Today, T-Mobile generates the majority of DT's profit and is worth about two-thirds of its market value.

Why was T-Mobile considering it then?

Former CEO John Legere gets credit for lighting a fire under T-Mobile, but it was DT's CEO Timotheus Höttges who transformed T-Mobile from a cash-burning carrier to the success story it is today.

However, T-Mobile seems to have hit a wall. Expanding into fiber appears to be the way out, but buying more companies requires investment. If DT and T-Mobile merge, securing capital will be much easier.

T-Mobile doesn't need DT to hold its hand

Because both companies operate in vastly different markets, a merger wouldn't create meaningful cost savings. And while a deal may make borrowing easier for T-Mobile, it's financially strong enough to chart its own course.

Instead of making the combined entity more valuable, a merger could drive investors away and tank the stock price.

T-Mobile will likely only be weighed down by DT. It has far more to gain by reviving its competitive spirit than by tangling itself in a cross-continental merger.

Want to know more about T-Mobile's struggles?

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Anam Hamid is a computer scientist turned tech journalist who has a keen interest in the tech world, with a particular focus on smartphones and tablets. She has previously written for Android Headlines and has also been a ghostwriter for several tech and car publications. Anam is not a tech hoarder and believes in using her gadgets for as long as possible. She is concerned about smartphone addiction and its impact on future generations, but she also appreciates the convenience that phones have brought into our lives. Anam is excited about technological advancements like folding screens and under-display sensors, and she often wonders about the future of technology. She values the overall experience of a device more than its individual specs and admires companies that deliver durable, high-quality products. In her free time, Anam enjoys reading, scrolling through Reddit and Instagram, and occasionally refreshing her programming skills through tutorials.

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