Germany's DT poised to gain majority control over T-Mobile in US

Deutsche Telekom (DT) stands to gain around $10.9 billion from the recent sale of a stake in its European cell tower business. The company is widely expected to use that money to gain a majority stake in T-Mobile in the US.

"Deutsche Telekom has been steadily increasing its stake in T-Mobile US and currently sits at ~48% ownership," noted the financial analysts at Raymond James in a recent note to investors. "With the capital received from the GD Towers deal [DT] should be well on the path to taking majority control of T-Mobile via the shares sale agreement with SoftBank. And we do not expect DT to sell any T-Mobile shares when T-Mobile US begins its stock buyback program by 2023."

DT late last week said that it would sell 51% of its tower business to a consortium of Canada's Brookfield and US private equity firm DigitalBridge.

DT CEO Tim Höttges has been relatively explicit about his desire for majority control over T-Mobile in the US. For example, in 2021, he announced deals that helped raise DT's stake in T-Mobile US by 5.3% to 48.4%. As Reuters noted at the time, T-Mobile US accounted for fully three-fifths of DT's sales and was its most profitable unit.

Figure 1: (Source: Robert K. Chin - Storefronts/Alamy Stock Photo)

T-Mobile appears set to maintain its momentum in the US market, even as DT continues its pursuit of the company.

"In our opinion, T-Mobile is executing well on its growth strategy," wrote the financial analysts at BofA Global Research in a recent note to investors. The firm said that it expects T-Mobile to report 551,000 postpaid phone net customer additions during the second quarter, a figure slightly above most Wall Street expectations.

Moreover, T-Mobile has emerged as the clear leader in the nation's race to speedy 5G services. According to the latest findings from network monitoring firm Ookla, T-Mobile offered by far the fastest median 5G download speed in the US at 187 Mbit/s in the second quarter. Verizon Wireless came in a distant second with 107 Mbit/s.

However, Verizon this week said that it has started deploying 100MHz of midband C-band spectrum for 5G in many markets across the US, up from the 60MHz it has been deploying to date. The operator said that the move stems from its recent $170 million agreement with SES to gain early access to the satellite operator's spectrum holdings.

Verizon suggested that its new C-band efforts will supercharge 5G network performance. Specifically, the company said that it recorded 1.4 Gbit/s peak download speeds near active C-band cell sites running 100MHz channels, and 500 Mbit/s further away from the towers.

Nonetheless, financial analysts remain confident in T-Mobile's ability to stay ahead in the game.

"The 'crowd favorite' in the carrier space continues to be T-Mobile, who seems to have the best case to beat-and-raise in Q2, with a tangible catalyst coming soon in the form of share repurchases," argued the financial analysts at Wells Fargo in a recent note to investors.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano