Senior managers at Deutsche Telekom (DT) were reported to have discussed a realistic valuation for the group’s 67% stake in T-Mobile US at a strategy meeting in Berlin yesterday. The German incumbent is willing to start negotiations for a sale at…
Senior managers at Deutsche Telekom (DT) were reported to have discussed a realistic valuation for the group’s 67% stake in T-Mobile US at a strategy meeting in Berlin yesterday.
The German incumbent is willing to start negotiations for a sale at US$35 per share and estimates it could achieve between US$35 and US$40 a share, according to a Bloomberg report citing a person with knowledge of the matter.
The news follows Sprint Corp’s decision not to pursue a merger with T-Mobile – which would have combined the US’ third and fourth largest mobile carriers – due to regulatory concerns.
However, a Reuters report later countered Bloomberg’s article citing a person familiar with the matter as saying that US$35 per share would be “substantially too low”.
T-Mobile US shares are up 1.36% on the back of the news to US$29.84. A US$35 per share offer on its current price would represent a 17% premium.
When Deutsche Telekom was in talks with Sprint Corp to sell its stake, the price mooted was US$40 per share.
Whether another bidder would be able to project the same synergies as Sprint to justify such a price remains to be seen. The only other proposal Deutsche Telekom has been presented with is a surprise US$33 per share offer tabled by French telco Iliad.
The German telco’s management dismissed that offer but Iliad is reported to be holding talks with a number of potential partners as it looks to find a way to raise its bid.
T-Mobile US currently has a market capitalisation of US$24bn, meaning DT’s stake is valued at around US$16bn. However, that value could fall according to analysts, many of whom believe T-Mobile US’ current challenger strategy is unsustainable in the long-run.
