Expansion of US participation: Telekom withdraws from the Netherlands

Expansion of US participation
Telekom withdraws from the Netherlands

Europe’s largest telecom group is orienting itself more towards the USA. Deutsche Telekom is selling its Dutch subsidiary for five billion euros and is putting part of the proceeds into the US mobile operator T-Mobile.

Deutsche Telekom is getting closer to the majority in the US mobile operator T-Mobile US and is also bringing Japanese technology investor Softbank on board. The Japanese – known for their stakes in corporations such as Uber and Alibaba – are rising to the second largest private shareholder in Telekom with a stake of 4.5 percent, as the Bonn-based Dax group announced. At the same time, Telekom is finally withdrawing from the Netherlands and selling its subsidiary T-Mobile Netherlands for around five billion euros in order to buy shares in T-Mobile US with part of the proceeds.

So far, Telekom holds 43.2 percent of the US subsidiary, which last year merged with its smaller competitor Sprint, which until then belonged to Softbank. Due to a voting rights agreement, Telekom is currently able to consolidate the US mobile operator in its balance sheet and is thus benefiting from the rapid growth on the other side of the Atlantic. Telekom boss Tim Höttges had told his shareholders in May that the goal was to exceed the 50 percent mark. After the sale in the Netherlands and the Softbank entry, it will be at least 48.4 percent.

Specifically, the Bonn-based company is issuing 225 million new treasury shares to SoftBank with a valuation of 20 euros per share and in return will receive around 45 million T-Mobile US shares at an average price of 118 dollars per share. Marcelo Claure from Softbank is to move into the supervisory board. “This cooperation promises value enhancement potential for both companies, SoftBank and Deutsche Telekom,” said Höttges.

In the Netherlands, Telekom is selling its business, which it holds together with Tele2, to a consortium made up of the financial investors Apax and Warburg Pincus. T-Mobile Netherlands is valued at 5.1 billion euros. Upon completion of the transaction, Deutsche Telekom will receive around 3.8 billion euros. Europe’s largest telecommunications group plans to use part of the proceeds to buy 20 million shares in T-Mobile US. The group had previously spun off the Dutch mobile radio tower activities from the company and sold them at the beginning of the year at a transaction value of 700 euros.