Deutsche Telekom Edges Closer to T-Mobile Control After Deal

(Bloomberg) -- Deutsche Telekom AG paid $2.4 billion to SoftBank Group Corp. to increase its stake in T-Mobile US Inc., taking it closer to its goal of holding a majority of the U.S. division.

The Bonn-based telecommunications company now holds 48.4% of the company after buying 21.2 million shares at an average price of $113 per T-Mobile share, according to a statement Wednesday. The company is using part of the approximately 4 billion euros received from the recently completed sale of T-Mobile Netherlands to purchase the stake.

While European telecom firms struggling due to fierce competition and tough regulation, Deutsche Telekom has long flagged that it wished to increase its stake in the U.S. business, which accounts for nearly two-thirds of the group’s sales.

Deutsche Telekom shares rose about 1% in Frankfurt, while T-Mobile shares rose 0.8% in pre-market trading in New York. SoftBank closed 2% higher.

SoftBank previously struck a complex deal with Deutsche Telekom to sell part of its stake in T-Mobile US. The Japanese company ended up with a stake in the U.S. firm after the completion of a mega-merger with Sprint Corp. in 2020.

In September last year the Japanese company agreed to swap about 45 million T-Mobile shares for a 4.5% stake in Deutsche Telekom AG. The deal allowed SoftBank to borrow against its T-Mobile stake as long as Deutsche Telekom gets to vote the shares pledged as collateral. 

SoftBank still holds about 39.7 million shares in T-Mobile, currently worth about $5.2 billion.

Deutsche Telekom previously had a 46.7% stake in T-Mobile after it bought 45 million shares in the company in September as part of its agreement with SoftBank. The move Wednesday involved the exercise of a call option for 21.2 million shares and the purchase of a further 9.3 million shares. The weighted average price compares with a closing value on Tuesday of $130.42. 

Deutsche Telekom Lifts T-Mobile US Stake to 48.4%: Deal Snapshot

T-Mobile is currently projecting 2022 subscriber growth that exceeded most analysts’ expectations. The carrier has had an edge over rivals through its earlier introduction of fast 5G service and that helped the company sign 646,000 customers in a new business last year: wireless home broadband. T-Mobile had expected to attract more than 7 million home broadband subscribers by 2025.

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