It looks like Deutsche Telekom will have to look elsewhere for a proper suitor for its T-Mobile US unit.
Despite an earlier report in the German publication Manager Magazin that Deutsche Telekom AG (NYSE: DT) is now negotiating with Comcast Corp. (Nasdaq: CMCSA, CMCSK), the giant US MSO apparently has no intention of buying T-Mobile US Inc. While Comcast declined to comment on the report, a source close to the company said it has "no interest" in taking T-Mobile off Deutsche Telekom's hands. (See Comcast Reportedly Pursuing T-Mobile .)
The report about Comcast's interest in T-Mobile had sparked a rise in Deutsche Telekom's stock price Wednesday. The German telecom giant, which has also declined to comment on the Comcast report, has been seeking to unload its US properties in favor of a pan-European focus for months. Among other things, it reportedly plans to use the proceeds from the sale of its controlling 67% stake in T-Mobile to launch a takeover bid for UK fixed-line incumbent BT Group plc (NYSE: BT; London: BTA). (See Deutsche Telekom Plotting BT Takeover – Report.)
With Comcast seemingly out of the picture, Deutsche Telekom may be back to square one with T-Mobile. As reported earlier, the company is still talking to Dish Network LLC (Nasdaq: DISH) and other possible suitors about T-Mobile. But the on-and-off discussions with Dish, which seemed hot earlier this month, have apparently cooled again as Deutsche Telekom has sought more attractive, financially stronger suitors. (See Not So Fast on Dish/T-Mobile Deal, Analyst Says .)
The reports about Comcast's interest in T-Mobile picked up steam yesterday because, in many ways, a buyout of the spectrum-rich wireless carrier could make sense for Comcast, which has made no secret of its wireless ambitions. MSO executives are now crafting plans to launch some type of WiFi First mobile service that would rely on both WiFi and cellular networks to deliver calls and data to customers.
But Comcast -- which dropped its $45.2 billion bid to buy Time Warner Cable Inc. (NYSE: TWC) in late April because of strong opposition from the Federal Communications Commission (FCC) and Antitrust Division of the U.S. Department of Justice -- may well be wary of tackling federal regulators so soon again. Indeed, some Wall Street analysts have cautioned Comcast to "lay low" on the acquisition front for a while because of regulators' concerns, with one analyst going so far as to say that the MSO is in Washington's "penalty box" right now.
Comcast may also have no interest to paying top dollar for T-Mobile, which is now the third-biggest wireless provider in the US after surpassing Sprint Corp. (NYSE: S) in subscribers earlier this year. That would be particularly true if MSO executives believe that WiFi networks, not cellular networks, will ultimately carry most of the nation's mobile traffic.
— Alan Breznick, Cable/Video Practice Leader, Light Reading