Deutsche Telekom casts its eyes back to Sprint merger in US
Reports in Germany claim Deutsche Telekom wants to restart talks with SoftBank-owned Sprint over a merger with its US operation T-Mobile
Deutsche Telekom is warming to the idea of merging its US operation T-Mobile with Sprint, according to reports in Germany.
A potential tie-up between the third and fourth placed mobile providers in the US has long been rumoured, with Sprint-owner SoftBank reportedly having held talks two years ago, which were ultimately curtailed by regulatory concerns.
Those initial talks broke down, but a report in German newspaper Handelsblatt claims that Deutsche Telekom favours merging its unit, led by John Legere, with Sprint in an all stock deal that would see the German company maintain control of the business.
Handelsblatt cites sources close to Deutsche Telekom’s management board, who said DT was looking at a deal but has also held discussions with other potential partners.
A merged entity would potentially produce billions of dollars in efficiency savings whilst also give the unit a stronger foothold to compete against larger rivals such as AT&T and Verizon.
One possible reason that discussions have resurfaced is the change in regulatory environment brought about by Donald Trump’s election to the US Presidency. Trump has promised to cut regulations, and immediately appointed Ajit Pai as FCC chairman – a man who has previously been supportive of M&A activity.
According to a report by the Kansas City Star, both Legere and Sprint counterpart Marcelo Claure, famed for their ongoing war of words on Twitter, would be poised for huge payouts should a merger happen.
The Star claims Claure, former CEO of distributor Brightstar, could pick up as much as $130 million in cash, stock and benefits should he exit the merged unit. Legere, would be in for a payout worth around $59 million should there be a change in control at T-Mobile.
It’s important to note that neither company has confirmed talks have taken place, although SoftBank owner Masayoshi Son admitted in Tokyo last month that he’d be interested in discussing a deal.