Report: Deutsche Telekom recoups investment in T-Mobile US

Deutsche Telekom's new CEO said an increase in the value of its US unit has already compensated for a €7.4 billion ($10 billion) writedown on T-Mobile US undertaken in 2012, and the unit's value has now returned to levels seen before the failed attempt to sell it to AT&T in 2011 for $39 billion.

As speculation builds over the potential merger between Sprint and T-Mobile US, Timotheus Hoettges told Bloomberg News that Deutsche Telekom now owns 67 per cent of a company worth $42 billion.

"The US is a great story for me," said Hoettges, who took over the CEO role from Rene Obermann on Jan. 1. "Truly, when you think how things came together, then I'm fairly proud--together with all those involved--of what we created there."

T-Mobile has an equity value of $26 billion and total debt of about $13.6 billion, according to data compiled by Bloomberg.

Hoettges, who was involved in negotiations with both MetroPCS Communications--with which T-Mobile US has since merged--and AT&T did not comment on current discussions about the sale of T-Mobile US. However, the German operator last week fuelled speculation on a sale by shifting control of the US mobile operator to a non-domestic holding company based in the Netherlands.

Latest reports say Sprint's owner SoftBank has now entered direct talks with Deutsche Telekom to resolve obstacles to a potential deal. Citing unidentified sources, Bloomberg said the German operator wants an all-cash offer for T-Mobile US, and SoftBank is now approaching banks in a bid to raise around $20 billion.

Previous reports from the Wall Street Journal said the total deal could amount to about $50 billion, with $31 billion being paid to T-Mobile and another $20 billion being used for refinancing existing T-Mobile debt.

Even if Deutsche Telekom and SoftBank do come to an agreement on financing, a merger of the two US operators could face regulatory hurdles as the market would see the number of national operators fall from four to three. At the same time, a merged Sprint/T-Mobile US would create a much stronger competitor to AT&T and Verizon.

Bloomberg noted that Deutsche Telekom wants a cash deal in order to finance its future network investments. The German operator said in December it plans to spend around €30 billion in the three years to 2015, with a focus on the expansion of its LTE and FTTC networks in Germany and its LTE network rollout in the United States.

For more:
- see this Bloomberg article
- see this separate Bloomberg article
- see this Deutsche Telekom release

Related Articles:
Deutsche Telekom fuels further T-Mobile US sale speculation
Report: Sprint has backing from 2 banks for T-Mobile bid
Report: Sprint is considering a bid for T-Mobile
Deutsche Telekom's Obermann cedes control to Hoettges
T-Mobile's Legere doesn't rule out Sprint deal, but also casts doubt on it
Europe's telcos fight back over single market plans

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