Deutsche Telekom considers T-Mobile tie-up

• DT could look to merge its US arm into one mega company
• The German operator holds a 52.8% stake in T-Mobile US
• Reports say merger could be one of the biggest public M&A deals in history

American powerhouse T-Mobile US has long been the apple of Deutsche Telekom’s eye owing to years of strong growth, but it could become much more, if reports are to be believed. 

In February, DT Group CEO Tim Höttges indicated that the German group is “continuously reviewing opportunities to further increase our stake” and does not plan to sell any T-Mobile US shares in 2026. DT currently holds 52.8% of T-Mobile. 

Now, reports suggest that the Bonn-based group is considering a blockbuster deal that would result in a full combination with its US subsidiary. 

According to a Bloomberg report (subscription required), which cited anonymous sources with knowledge of the matter, DT has discussed a proposal in which a new holding company would launch bids for shares in both operators. Such a move would represent the largest public M&A deal in history, the report added. 

The report also indicated that discussions are at a preliminary stage and that any transaction would require political support in Berlin and Washington. Notably, the German government and state-owned lender KfW own a combined 28% stake in DT, and may not be open to a deal that would reduce their shareholding. 

The Financial Times also reported that it is likely the new holding company would be headquartered in a European country other than Germany and quoted sources as saying that the two operators have considered a full partnership for years but there is no certainty a deal will proceed. According to the media outlet, DT is Europe’s largest telecoms group with a market capitalisation of more than €142bn, while T-Mobile US has a market value of $215bn. It used to be the fourth-largest player in the US market, behind Verizon, AT&T and Sprint, but in 2020 it merged with SoftBank’s US operator in a $26bn deal to create a direct competitor to the two US behemoths. Deutsche Telekom then implemented a strategy to take control of the combined operator, spending $2.4bn to buy shares from SoftBank, which currently retains a small stake.

– Anne Morris, Contributing Editor, TelecomTV