Deutsche Telekom has no plans to sell its controlling stake in T-Mobile US before the FCC’s upcoming broadcast incentive auction is complete. T-Mobile US, which reported strong results for Q4 and FY 2015, has spent at least US$1.1bn on 700 MHz spectrum licences so far this year and has indicated it could shell out up to US$10bn at the auction.
Deutsche Telekom (ETR:DTE) has no plans to sell its controlling stake in T-Mobile US (NYSE:TMUS) before the FCC’s upcoming broadcast incentive auction is complete.
The German incumbent intends to focus on the auction of 600 MHz spectrum, which is set to begin on 29 March and could last months, and await a more favourable political environment for telecoms mergers, Reuters cited two sources saying.
Auction rules prohibit participants from engaging in M&A or partnership talks from the time of submitting their applications until the auction results are disclosed.
Deutsche Telekom, which has a 65.4% stake in T-Mobile, has long contemplated selling the unit, which last year overtook Sprint (NYSE:S) as the US’ third largest wireless carrier. In 2014, federal regulators blocked a planned merger between T-Mobile and Sprint on competition grounds. And last year, talks between T-Mobile and Charlie Ergen’s satellite broadcaster Dish Network (NASDAQ:DISH) stalled amid controversy surrounding the discounts sought by affiliates of the latter in the AWS-3 spectrum auction. In August, Ergen suggested that the fiasco had made it virtually impossible to engage in M&A.
T-Mobile has made it clear that it plans to participate in the upcoming auction, which will see broadcasters sell spectrum to the FCC in the ‘reverse’ part of the process and others, including wireless operators and potentially also private equity and tech firms, bid for it in the ‘forward’ process. T-Mobile executives have previously said the company may spend up to US$10bn at the auction.
T-Mobile has spent at least US$1.1bn on 700 MHz spectrum licences so far this year as it seeks to expand its 4G LTE network.
The company said in a recent SEC filing that these spectrum purchases will increase its total low-band spectrum holdings, which support its ‘extended range LTE’ service, from 210 million POPs to 250 million POPs upon closing. The company has said extended range LTE travels up to twice as far as mid-band spectrum and works up to four times better in buildings.
In its latest earnings presentation, T-Mobile said it more than doubled its geographic 4G footprint last year, extending its reach to 305 million people.
The company reported strong results for Q4 and FY 2015. It saw service revenues grow 11.7% year-on-year in Q4, which it said was driven by the “rapid growth” in its customer based. The company added 8.3 million customers throughout the year, bringing its total customer base to some 63 million as of 31 December 2015. Total revenues for 2015 were up 8.4% year-on-year to US$32.1bn, while adjusted EBITDA stood at US$7.4bn.
