Deutsche Telekom chief argues benefits of strong third US operator

By:
James Pearce
Published on:

Tim Hoettges also called on the German government to take careful consideration before offloading any of its stake in DT, amid reports potential coalition partners want Merkel to sell

Tim Hoettges 160x186

Deutsche Telekom CEO Tim Hoettges has claimed a stronger third player in the US mobile market would help drive competition, as his firm reportedly nears a deal to merge its US arm T-Mobile with rival Sprint.

Hoettges refused to comment on the merger speculation in an interview with German newspaper Welt am Sonntag, but seemed to support the idea of a stronger third player. T-Mobile is currently the third biggest mobile provider in the US, behind Verizon and AT&T.

“In the U.S. there is a duopoly between two very big players, and then there are two smaller players well behind,” he said. “A third strong player would be good for competition.”

This isn’t the first time T-Mobile has been linked with a merger with SoftBank’s Sprint. A deal was reportedly close in 2014 but fell apart due to concerns about getting regulatory approval. But the Deutsche Telekom CEO suggested consolidation may be easier during Donald Trump’s presidency.

In the report, Hoettges added: “History has taught us that governments led by Republicans are more hands-off than Democratic administrations.”

He also warned the German government to take careful consideration before selling off part of its stake in the telco. The government currently holds a 14.3% direct stake in DT, while also holding an additional 17.5% through government bank KfW.

German Chancellor Angela Merkel retained her position in a recent election, but is now in talks to form a government. Two potential partners, the Free Democrats and the Green party, have said they would look to reduce the government’s holding in Deutsche Telekom, worth an estimated €23.7 billion, in order to fund fibre rollouts.

In the interview, which was published on Sunday, Hoettges raised the question of who would buy the stake in Deutsche Telekom should the government choose to offload some of its shareholding.

“What interest would the owner have in infrastructure security? Would the owner want to invest in Germany, and if so, where and in particular, how much?” he added.