Deutsche Telekom CEO Timotheus Hoettges is open to creating an American “super maverick” by combining its subsidiary T-Mobile US with Softbank-owned Sprint Corp, but acknowledged it would be difficult to get a deal past regulators. Hoettges’…
Deutsche Telekom CEO Timotheus Hoettges is open to creating an American “super maverick” by combining its subsidiary T-Mobile US with Softbank-owned Sprint Corp, but acknowledged it would be difficult to get a deal past regulators.
Hoettges’ comments follow those of T-Mobile US CEO John Legere, who said last week that a tie-up was a case of when and not if, and Softbank CEO Masayoshi Son, who has been banging the drum for a deal in recent months.
Speaking on DT’s Q1 conference call, Hoettges said that to really create value in the US market it would make sense to combine with another operator to create a “super maverick” to challenge America’s “bifurcated market”.
However, the CEO warned that the Federal Communications Commission (FCC) and Department Of Justice (DOJ) wanted to keep the “environment open for four players”.
Hoettges questioned how the regulators might enable a four player market to work, asking what the FCC’s policy would be towards spectrum and reserving licences for smaller players. He suggested that smaller operators would need advantages to allow them to compete with AT&T and Verizon Wireless.
The executive said the operators would get a better feel for this when the FCC proposes its rules for the 600 MHz auction on 15 May. Hoettges expected there to be pro-competitive measures built in and perhaps even spectrum reserved for smaller players.
Later on in the call Hoettges was pressed on what remedies T-Mobile and Sprint could offer to get a merger over the line. The CEO said he couldn’t comment “because this is bilateral negotiation process and with the authorities, and even if we would have a deal on the table, I would not disclose that in a quarter result”.
Dish can’t afford T-Mobile or DirecTV
One company that could benefit from any remedies attached to a Sprint/T-Mobile merger would be spectrum-rich Dish Network.
The DTH provider announced its Q1 results yesterday and its chairman Charlie Ergen said that his company was ensuring that it was well-positioned ahead of a potential flurry of consolidation deals.
“We don’t have the kind of money to go outbid Sprint for T-Mobile or outbid AT&T for DirecTV,” Ergen said.
“Washington will make rules and regulations and merger approvals and things and decisions that will affect us, and they’ll pick winners and losers. And the good news is that the administration and the FCC have talked a lot about competition and being in favour of competition. And that would be good for Dish because we like to compete.”
Ergen went on to say that should a Sprint/T-Mobile tie-up be rejected by regulators, then that would rekindle a strategic interest for Dish in T-Mobile, as either a partner or acquisition target.
