Deutsche Telekom Could be Making Moves for a Sprint/T-Mobile Merger – Even Though They Are Denying It

January 16, 2014 - Written By Alexander Maxham

There’s a ton of speculation running around right now that T-Mobile US would be bought by Sprint, or rather Sprint’s majority owner Softbank. Today, Deutsche Telekom – T-Mobile USA’s majority stake holder – made a move that shows us that they are actually thinking of possibilities for a sale of their T-Mobile stake. Deutsche Telekom has shifted their US holdings from Germany to a Netherlands subsidiary. This is according to a regulatory filing. According to an analyst at BTIG Research, Walter Piecyk, who notes that the Netherlands has a more favorable tax treatment of asset sales. “Vodafone held its stake in Verizon Wireless in the Netherlands and is expected to have a very ‘tax-efficient’ transaction in the sale of those shares,” said Piecyk. “This move could increase the speculation that Deutsche Telekom would be willing to sell”.

There’s still a lot of road blocks here. Sure in the past, Deutsche Telekom has tried very hard to sell of T-Mobile USA, but that was when T-Mobile USA was losing  half a million subscribers a quarter. In 2013, they added nearly a million each quarter and over 1.5 million in Q4. And they are quickly approaching the #3 spot in the US wireless carriers. So maybe Deutsche Telekom will be a bit more reluctant to sell their stake in T-Mobile USA? Additionally, you’ve got all the regulatory stuff that has to pass. I find it really hard to believe that the FCC would be willing to allow Sprint and T-Mobile merge, since they have said very recently that they want more competitors in the wireless industry and not less.

Deutsche Telekom did respond to Re/code’s article earlier and stated that this move was not a precursor to a deal. “The transaction concerns an internal reorganization of various international Deutsche Telekom holdings.” A representative that spoke with Re/code stated, “It does not affect the actual stake in the companies. And there’s no connection at all to any possible M&A moves.”

So that’s that. We don’t really know much more at this time. But I’m still hoping it doesn’t happen, because I too would love to see more competition here in the wireless industry. I’d love for Sprint and T-Mobile separately to give Verizon and AT&T a run for their money. How about the rest of you?