Deutsche Telekom AG has secured a majority stake in the US network operator T-Mobile by purchasing a block of shares. Specifically, since Tuesday, a good 605 million shares or 50.2 percent of T-Mobile have belonged to the German Telekom group.
The company announced this to the US Securities and Exchange Commission (SEC) on Wednesday. Deutsche Telekom (DTAG) has even more voting rights at T-Mobile, namely 53.9 percent. This stems from agreements that the Bonn-based company made with the Japanese group Softbank on the one hand and with the richest Bolivian, Raul Marcelo Claure Bedoya, on the other. Softbank and Claure also hold T-Mobile shares, but cede voting rights to DTAG for almost 40 million and exactly five million shares, respectively.
Claure founded a company called Brightstar in the USA in 1997, which he sold to Sprint in 2014, where he also took over the management of the company – until Sprint’s merger with its rival T-Mobile in 2020. He then held managerial positions at Softbank until early 2022.
It wasn’t cheap
T-Mobile is the second largest mobile network operator in the United States. Last year, T-Mobile USA sold its landline for $1. This triggered billions in write-downs and provisions of $700 million.
The package of 20 million shares now purchased by DTAG comes from a contract that has been running since May 2021 and was terminated early on the last day of March. The unit price that DTAG has to pay was calculated as a weighted average and amounts to $143.27. That’s $10.01, or 7.5 percent, higher than the March 31 closing price.
22 years from takeover to new majority
T-Mobile USA was founded in 1994 by John Stanton as a subsidiary of Western Wireless Corporation under the name Voicestream Wireless PCS. In 2001, DTAG, under CEO Ron Sommer, bought Voicestream and the smaller network operator Powertel for a total of 27.9 billion US dollars (around 60 billion marks at the time). Of that, $4.2 billion went in cash, the rest in Telekom stocks. However, Telekom also had to take on voice stream debts of around eleven billion euros.
With the takeover, Sommer made himself unpopular with many Telekom shareholders. It wasn’t just at the 2001 Telekom shareholders’ meeting that massive shareholder criticism was voiced. Due to the Voicestream takeover and the auction of German UMTS licenses, DTAG incurred high debts. As if that wasn’t enough, the book values of the Group’s own real estate proved to be excessive. The fact that Voicestream made heavy losses didn’t help.
In 2012, T-Mobile USA merged with the smaller provider MetroPCS and went public on the New York Stock Exchange. The larger merger with Sprint followed in 2020. Deutsche Telekom AG thus retained 42 percent of the shares in the US group, and now it is more than 50 percent again for the first time. Ron Sommer is now a board member of the Russian group Sistema.
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