DT's Best US Exit Bet

4:40 PM With MetroPCS deal, is Deutsche Telekom finally saying auf wiedersehen to its US investment?

Michelle Donegan, Contributing Editor, Light Reading

October 3, 2012

2 Min Read
DT's Best US Exit Bet

4:40 PM -- For T-Mobile US Inc. parent Deutsche Telekom AG (NYSE: DT), the merger with MetroPCS Inc. (NYSE: PCS) looks like its best bet for an exit from the U.S. market. (See T-Mobile, MetroPCS to Merge.)

But that's not what Deutsche Telekom is saying about the deal. A company spokesman in Germany told Light Reading Mobile that DT has no plan to exit the U.S. market.

The DT spokesman did explain that since the deal with MetroPCS would give DT a stock market listing, the company would gain "flexibility," but that the operator remained committed to the U.S.

That "flexibility" is the real benefit of the deal for Deutsche Telekom. If the merger is approved, then the German giant would finally be able to offload some or all of its U.S. assets, which it has clearly wanted to do for some time. T-Mobile USA is the last mobile operation DT has outside Europe.

In the meantime, the merged entity will have very favorable spectrum holdings for LTE and it can work toward becoming the 4G "value-leader," which would be good for competition in the U.S. market. (See T-Mobile/MetroPCS Wants to be 4G 'Value-Leader'.)

Heavy Reading analyst Berge Ayvazian told Light Reading Mobile yesterday that he thinks the merger with MetroPCS would be an exit strategy. (See Is MetroPCS DT's Magenta Exit?.)

Bengt Nordstrom, founder of consulting firm Northstream , also shared his views on the deal: “DT tried to sell to AT&T because they needed to exit, and to generate cash for their other business units. I have no doubt that they want to exit the U.S. market. They are using the $4 billion penalties from the failed AT&T acquisition to create value for an exit -- I don’t believe they are in the U.S. market for the long term."

“With this deal, they still don’t have the scale to be the number three in the market, and you have to be at least the number three player in any market to survive," he added.

So what do you think? Does the MetroPCS deal mean that Deutsche Telekom is staying or going?

— Michelle Donegan, European Editor, Light Reading Mobile

About the Author(s)

Michelle Donegan

Contributing Editor, Light Reading

Michelle Donegan is an independent technology writer who has covered the communications industry on both sides of the Pond for the past twenty years.

Her career began in Chicago in 1993 when Telephony magazine launched an international title, aptly named Global Telephony. Since then, she has upped sticks (as they say) to the UK and has written for various publications, including Communications Week International, Total Telecom, Light Reading, Telecom Titans and more.

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