Deutsche Telecom May Be Mulling Spin-Off Or IPO for T-Mobile USA
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Deutsche Telekom (NYSE: DT) is considering a number of options for its struggling T-Mobile USA subsidiary, including a possible IPO or spinoff, reports the WSJ, which quotes people familiar with the matter.
As of recently, DT was rumored to have been in merger talks with Sprint (NYSE: S) or Clearwire (NSDQ: CLWR). However, either combination would be technically and financially challenging. But T-Mobile, the fourth-largest U.S. wireless carrier, needs a new strategy that can reverse its recent performance, which includes losing customers while AT&T (NYSE: T) and Verizon have been gaining millions.
A final decision likely won’t come for a couple of months—only recently has DT started to talk to a number of banks about underwriting an IPO, which could help fund network expansion, or a spinoff. A DT spokesman declined to comment.
People familiar with the deal said the most likely scenario would be for DT to sell about 20 percent of the division to investors and retain the rest. A merger with a U.S. rival may also still be in the card, but that scenario is now less likely. Based on the company’s estimated earnings, the company may have a value of about $20 billion and could handle about $12 billion or so in debt, the WSJ reports. It will need more cash to continue its 3G build-out, and to buy the rights to more airwaves as networks move to 4G.
Posted In: Companies, T-Mobile, deutsche telekom
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