Deutsche Telekom has struck a $7 billion share-swap deal with SoftBank Group to increase its stake in US unit T-Mobile and sold its Dutch unit in a major shake-up that strengthens the German group’s transatlantic focus.
As a result of the two deals announced on Tuesday, Deutsche Telekom will raise its stake in T-Mobile US by 5.3% to 48.4%, bringing chief executive officer Tim Hoettges closer to his goal of securing direct control over the $170 billion US telecoms operator.
SoftBank will in return receive cash and a 4.5% stake in Deutsche Telekom, establishing a direct shareholding relationship after the Japanese group sold its US Sprint unit to T-Mobile in a deal that closed in early 2020.
The latest transactions seek to lock down that deal by bringing Deutsche Telekom within touching distance of majority ownership over T-Mobile US—which accounts for three-fifths of group sales and is its most profitable unit.
“This is a very attractive transaction for Deutsche Telekom and its shareholders to further benefit from the value creation potential in T-Mobile US and beyond,” Hoettges said.
As part of the complex transaction, Deutsche Telekom will trigger option agreements, enabling it to lock in an average price of $109 per share for the 65 million T-Mobile shares it is acquiring, below last week’s closing price of $136.
{{/usCountry}}As part of the complex transaction, Deutsche Telekom will trigger option agreements, enabling it to lock in an average price of $109 per share for the 65 million T-Mobile shares it is acquiring, below last week’s closing price of $136.
{{/usCountry}}Deutsche Telekom had options to lift its stake in T-Mobile US above 50%, Hoettges told a briefing, either by exercising further options or sitting out the $60 billion in share buybacks that the US company plans in the coming years.