Feature Article

August 29, 2014

T-Mobile US Would Be Sold for Any Offer of at least $35 a Share

Deutsche Telekom AG is willing to negotiate a sale of its T-Mobile US business at $35 a share or more, according to a Bloomberg report.

Senior managers of Deutsche Telekom reportedly discussed T-Mobile’s valuation at a strategy meeting in Berlin.

T-Mobile, which rejected a $33-a-share bid by France’s Iliad SA, might be sending a message about the size of that firm’s bid, perhaps in an effort to encourage a higher bid.

Deutsche Telekom’s valuation of T-Mobile opens the door for an improved bid from Iliad or new proposals from potential suitors such as Dish Network or any other buyer. .

Some observers believe a bid by France’s Illiad would not have much synergy. A bid by Dish Network, some observers believe, would provide additional spectrum, plus the ability to create a company capable of creating a national triple-play capability, combining Dish Network’s video entertainment product with the mobile network to provide voice and Internet access.

That alignment, it might be argued, better positions T-Mobile US against AT&T, which also hopes its acquisition of DirecTV would allow similar bundles on a national basis.

Either bid would have greater chance of winning approval by the U.S. Department of Justice and Federal Communications Commission, as either of those deals would preserve the four-provider structure at the top of the U.S. mobile market, where a Sprint buy would have reduced the number of leading contestants to three, from four.

In either of those scenarios--Illiad buying T-Mobile US or Dish Network buying T-Mobile US--it is likely that the U.S. market might, in the medium term, acquire a fifth supplier, as the move to national triple-play offers also would compel Comcast to add a mobile capability as well.

To be sure, Comcast already relies on a triple-play strategy using only its fixed network. But mobile services are viewed widely as an essential part of the bundle, especially if consumers continue to abandon fixed-line voice services in favor mobile voice.

Also, once content becomes more of an “any screen” experience, a mobile option could be a crucial part of maintaining the value of video entertainment offerings as well. 

Edited by Stefania Viscusi

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