Deutsche Telekom still wants to sell T-Mobile

Despite a growing reputation for being innovative, and its rapidly growing size, T-Mobile still is not quite big enough on its own to go up against the big guys like Verizon and AT&T. So says Deutsche Telekom CEO Tim Hoettges. Now, you might wonder what the CEO of an overseas carrier has to do with T-Mobile. As it turns out, Deutsche Telekom owns 67% of  the nation's fourth largest carrier.

Hoettges was hoping that Sprint would be able to get a bid past U.S. regulators like the FCC and the FTC. Sprint owner SoftBank had been working on getting the financing for a deal. However, SoftBank CEO Masayoshi Son was concerned that SoftBank would have to give up too much in break-up fees if the deal couldn't close. In 2011, when AT&T decided to withdraw its bid for T-Mobile also because of regulators, T-Mobile received $3 billion in cash and a ton of spectrum as a break-up fee from AT&T.

The Deutsche Telekom executive says that U.S. regulators are looking at the wrong thing. Instead of worrying that a Sprint-T-Mobile combination would drop the number of major carriers from four to three, he says that they should be concerned with Verizon and AT&T's duopoly. Hoettges is also concerned that the top two U.S. mobile operators have widened the gap with Sprint and T-Mobile by purchasing more spectrum in the FCC's recent mid-band auction.

Hoettges says that T-Mobile's current strategy cannot be sustained long term because of the $4 billion to $5 billion in investments each year that it needs to make in order to keep up. He also says that T-Mobile CEO John Legere has done a great job although "his management style will never be adaptable to Germany."


Bottom line, while the Deutsche Telekom chief is impressed with T-Mobile's turnaround, he also hopes that the environment changes and that U.S. regulators would welcome consolidation in the industry with T-Mobile getting bought out by a monied partner.

source: re/code via SlashGear