Analysts predict the sale of T-Mobile USA to AT&T will dramatically alter the landscape of the US mobile market.
The deal, agreed over the weekend, will see Deutsche Telekom receive $39 billion (€27.5 billion) in cash and AT&T shares for its US unit, and take an 8% stake in the US carrier. The German incumbent will use €5 billion of the proceeds to buy-back shares, and cut its net debt by €13 billion.
AT&T’s purchase price values T-Mobile USA at around seven times its 2010 EBITDA, and brings a curtain down on rampant speculation regarding Deutsche Telekom’s plans for the troubled division.
Thomas Wehmeier, a principal analyst at Informa Telecoms & Media, told Telecoms Europe.net that Deutsche Telekom chief Rene Obermann has pulled “the ace from the pack,” in setting up the sale to AT&T, following weeks of speculation that a merger with Sprint or LightSpeed was in the cards.
“The sale of the unit helps Deutsche Telekom to recoup the value sunk into the business, while retaining a strategic interest in the hugely important US market,” Wehmeier notes, adding. “T-Mobile USA’s standing within the Deutsche Telekom business had veered dramatically in recent years from the star performer in its global portfolio to an isolated and increasingly problematic black sheep.”
Wehmeier also notes the collaboration of Deutsche Telekom with AT&T will provide an “interesting counter-balance to the deepening partnership emerging between Vodafone and Verizon.”
The sale comes less than a fortnight after Obermann said a sale of T-Mobile USA was one of several options on the table for the ailing unit, and less than two months after Philipp Humm was parachuted into the CEO’s seat at the US division to turn its performance around.
However, the deal will face steep hurdles in clearing competition authorities, Wehmeier notes, because it will result in AT&T and Verizon controlling close to 75% of the US market. Deutsche Telekom predicts the sale will close by end 1H12.
AT&T claims the deal will add 1.2 million square miles to its LTE coverage, allowing it to bring 4G access to an additional 46.5 million US consumers.