When Tim Höttges talks about America, the head of Deutsche Telekom likes to adopt a solemn tone. “We are suppliers to the western world, with two stable pillars,” said Höttges before the most recent general meeting. Because Telekom not only sells telephony and Internet in Europe, but with its subsidiary T-Mobile it is also one of the three largest mobile communications providers in the USA. Last year, the Bonn-based group generated a good 60 percent of its sales and profits in America.
But the growth overseas has a catch: Telekom has not yet permanently secured control of the US subsidiary. Two years ago, T-Mobile merged with its competitor Sprint, and since then Telekom has owned less than half of the shares in the merged company. Only because Telekom has secured the majority of voting rights for a few years is it allowed to fully report the transactions of T-Mobile and Sprint in its balance sheet.
But now Telekom is taking the next step towards long-term control: it is buying more shares in T-Mobile US for more than two billion euros, the group announced on Wednesday. This increases their stake in the American business from 46.7 to 48.4 percent. Of course, Höttges is not satisfied with that: “We will soon have the 51 percent back, the secure controlling majority,” announced the CEO at the shareholders’ meeting.
The opportunity to top up came just in time for Telekom
Telekom can buy the T-Mobile shares from the Japanese group Softbank on comparatively favorable terms. Softbank was the majority owner of merger partner Sprint and therefore holds shares in the new joint venture T-Mobile. Softbank has granted Telekom options so that the Bonn-based company can buy more T-Mobile shares.
The opportunity to increase came just cheap for Telekom: The group closed its pure mobile phone business two weeks ago sold in the Netherlands and received about four billion euros for it. Now he’s spending at least some of that money in America. On the stock exchange, Telekom temporarily gained one percent in value on Wednesday.
When network operators merge, as in the case of T-Mobile and Sprint, they can avoid a lot of double spending: For example, they can combine antenna sites and save on administration. On the other hand, mobile customers in the USA have had less choice since the merger. The authorities had examined the merger all the more lengthily and ultimately approved it subject to conditions. For example, T-Mobile and Sprint had to give up part of their business and their mobile communications frequencies to competitors.