T-Mobile's board of directors voted to approve its first-ever stock buyback, having decided to repurchase up to $1.5 billion of the company's shares on Wednesday. The stock will be added to its existing holdings, with Deutsche Telekom also planning on buying additional shares even though it already owns more than 60 percent of the third largest mobile service provider in the country. The buyback efforts are understood to be starting tomorrow and will be completed by December 31st, 2018. Industry analysts are yet to evaluate T-Mobile's chances of successfully exhausting its funds designated for the first buyback in its history but $1.5 billion appears to be an achievable figure that currently amounts to approximately three percentage points of the wireless carrier's market cap which was just over $51.4 billion as of Wednesday morning PST.
The move is in line with Deutsche Telekom's recent comments on its subsidiary's performance as the German conglomerate repeatedly signaled it's "extremely pleased" with the manner in which Chief Executive Officer John Legere managed to turn things around at the company and seize the title of the third largest wireless carrier in the country from Sprint. Following the buyback, Deutsche Telekom is likely to hold a nearly 62 percent stake in the Bellevue, Washington-based firm, with that percentage being even larger when counted alongside T-Mobile's own holdings, increasing the firm's immunity to takeover attempts. The telecom's parent is understood to be committing up to $500 million to the effort, seeking to increase its holdings by an additional percentage point.
T-Mobile EVP and CFO Braxton Carter related the move to the telecom giant's recent merger attempt with SoftBank's Sprint which failed but also led to a "significant shareholder rotation" that the company believes it's now able to take advantage of. Should the wireless carrier decide to explore consolidation options in the future which it already signaled may happen, it will have additional leverage in any related talks and be even more likely to negotiate a good deal for its shareholders. In the near term, T-Mobile isn't planning any major acquisitions but may focus on smaller purchases, Mr. Carter suggested, indirectly ruling the company out of any potential media deals similar to AT&T's proposed merger with Time Warner.