Germany's Deutsche Telekom finally buys a majority of T-Mobile US

After years of increasing its ownership in T-Mobile US, Germany's Deutsche Telekom (DT) announced this week it crossed the 50% threshold, and now is the majority owner of the US-based company.

"We have the majority and are the largest shareholder of the world's most valuable telecommunications company – T-Mobile US," DT CEO Tim Höttges said this week at the company's annual general meeting, according to Reuters.

Figure 1: (Source: Agencja Fotograficzna Caro/Alamy Stock Photo)

The move comes as little surprise. For example, DT gained roughly $11 billion from the sale of a stake in its European cell tower business last year. The company was widely expected to use that money to increase its stake in T-Mobile US from around 48% to over 50%.

Höttges has been steadily growing the German company's share in 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 three-fifths of DT's sales and was its most profitable unit.

T-Mobile, for its part, has enjoyed incredible success in the US market. Long a distant underdog to the likes of Verizon and AT&T, the company regained its footing with an "uncarrier" marketing push that included a number of new, popular offerings in the US market such as free Netflix. T-Mobile's momentum kicked into overdrive following its successful $26 billion acquisition of Sprint in 2020.

Last year T-Mobile's market cap grew larger than most other telecommunications companies in the world. Today, it sits around $178 billion, ahead of Verizon's $166 billion, AT&T's $140 billion and Vodafone's $30 billion. It's also roughly even with China Mobile's market cap – China Mobile counts almost 1 billion mobile customers in China, while T-Mobile counts around 110 million in the US.

Most analysts expect T-Mobile's upward trajectory to continue in 2023. "T-Mobile remains among our top ideas," wrote the financial analysts at TD Cowen in a recent note to investors. They expect the company to gain around 500,000 new phone customers in the first quarter. More broadly, they wrote that the company ought to complete its $8.9 billion stock repurchase program this year, and to generate Sprint merger synergies of up to $8 billion by next year.

Foreign ownership of US-based telecom companies isn't a new concept. For example, Japan's Softbank purchased an ownership position in Sprint in 2013.

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