T-Mobile Can Stay Independent, Owner Deutsche Telekom Says

By Brian Parkin and Nicholas Brautlecht

T-Mobile US Inc. (TMUS), the Deutsche Telekom AG (DTE) unit that has lost two suitors this year, can sustain itself as a standalone business, according to the German company’s chief executive officer.
Deutsche Telekom’s chances of exiting the U.S. dimmed after the carrier rejected an $18 billion improved bid by France’s Iliad SA this month. Sprint Corp. withdrew from takeover talks in August over conditions of the deal and concern that regulators wouldn’t approve a combination of the third- and fourth-largest wireless carriers in the nation.
“We are looking into the options, but nevertheless we have an independent, self-funding future for our activities in the U.S.,” Timotheus Hoettges said today in an interview in Hamburg. “It is a great business, it is a great perspective, we could have a lot of potential to realize i
n the future.”
T-Mobile is likely to require billions of dollars of investments in network quality and customer acquisition in the coming years. Still, selling T-Mobile would eliminate a third of Bonn-based Deutsche Telekom’s revenue and cut off its only growing unit.
A combination of smaller players would be better-equipped to compete with U.S. market leaders Verizon Communications Inc. and AT&T Inc. than they are as separate challengers, Hoettges said.

Photographer: Simon Dawson/Bloomberg

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Cash Flow

“These two companies are generating more than 100 percent of the total cash flow of the industry,” he said. “It is much better if there would be a combination or consolidation of smaller players to even attack the bigger players in a more efficient way.”
Verizon reported today its net cash from operating activities reached $23.2 billion in the first nine months. The largest U.S. wireless carrier missed profit estimates as more new subscribers took advantage of discounts on devices.
T-Mobile gained 1.7 percent to $27.43 at 9:51 a.m. in New York, valuing the Bellevue, Washington-based company at $22.1 billion. Deutsche Telekom rose 1.4 percent to 10.80 euros in Frankfurt. The carrier has a market value of 49 billion euros ($62 billion).
While Dish Network Corp. (DISH) may make a move for T-Mobile, Deutsche Telekom’s planning has shifted to how it can keep the unit’s growth momentum going and how it can secure sufficient wireless spectrum in auctions scheduled through the middle of next year, a person familiar with the matter said this month.