Report: Deutsche Telekom shelves sale of T-Mobile as incentive auction approaches

Deutsche Telekom is shelving efforts to sell T-Mobile US (NYSE:TMUS) to focus on the upcoming incentive auction of 600 MHz broadcast TV airwaves, Reuters reported. The move could give potential buyers time to wait for a more favorable political climate for telecom consolidation.

The FCC later this month will start a "reverse auction," taking the first steps toward buying spectrum back from TV broadcasters. After an "unpacking" period during which broadcast TV channels are reassigned to free up spectrum for other uses, those airwaves will be bid on in a "forward auction."

The entire process is expected to last several months. "During that period, there will be no M&A activity in the U.S. telecoms sector," according to an anonymous source quoted by Reuters.

Deutsche Telekom has long wanted to spin off its U.S. carrier business but hasn't been able to close a deal. Sprint (NYSE: S) and T-Mobile had hoped to merge in 2014, but federal regulators blocked the tie-up on the grounds that it would result in an uncompetitive market. T-Mobile then entered negotiations with Dish Network, but those talks stalled.

Meanwhile, T-Mobile continues to gain steam in a competitive U.S. market. Last year it emerged as the nation's third-largest mobile operator, surpassing Sprint, and it gained 4.5 million overall net postpaid adds in 2015.

T-Mobile is expected to be an active bidder in the upcoming auction -- carrier executives have said they may have up to $10 billion to spend on spectrum licenses -- and auction participants are forbidden from engaging in any partnership or merger talks for a period before and after the bidding process. Deutsche Telekom owns 65.4 percent of T-Mobile.

For more:
- see this Reuters piece

Related articles:
T-Mobile seen as favorite to win spectrum in 600 MHz auction, but smaller carriers likely to jump in as well
Evercore: T-Mobile to post growth in subscribers and earnings in Q4
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