Deutsche Telekom aims for majority stake in T-Mobile US by 2024

Deutsche Telekom plans to secure the majority stake in U.S. wireless carrier T-Mobile by 2024 in order to help facilitate its expansion in Germany.

The Bonn-based firm hopes surging profits at its previously fully owned subsidiary will finance the investments needed to connect millions of German households to the Internet via ultra-fast fiberglass networks.

Chief Executive Tim Höttges told reporters Deutsche Telekom had a number of tools at its disposal to raise its stake above the 43% it currently owns in T-Mobile

“When exactly this will happen is something we’re keeping to ourselves, but we have until 2024,” he said on Thursday.

In June that year, call options on Softbank’s 8.6% stake in T-Mobile expire, giving Deutsche Telekom the right to purchase 44.9 million shares for a fixed price of $101.46 each, a discount of nearly 25% from T-Mobile’s closing price on Wednesday. It can also acquire a further 56.6 million shares at the going market price. 

Management also said T-Mobile’s planned $60 billion share buyback between 2023 and 2025 would, over time, boost Deutsche Telekom’s stake naturally.

“We definitely want to get to 50% plus one share. More would always help though,” Höttges said, adding that gaining clear control over the U.S. associate was his top priority. 

Expansion plans

Deutsche Telekom plans to roll out fiberglass broadband internet to 10 million customers and cover virtually the entire country with 5G mobile networks by 2024.

To achieve this, more than €5.5 billion ($6.7 billion) in investment is earmarked for Germany this year alone, excluding any potential costs for buying spectrum.

T-Mobile US is expected to help fund these costs thanks to $7.5 billion in annual synergies from its merger with Sprint, 25% more than forecast when the deal was completed in April last year. 

Deutsche Telekom once fully owned T-Mobile US but its holding was diluted when T-Mobile merged with MetroPCS Communications Inc. and listed on the New York Stock Exchange. T-Mobile’s acquisition of Sprint further diluted Deutsche Telekom’s stake.

The German state still owns close to a third of Deutsche Telekom.

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