Deutsche Telekom sells its Dutch arm

THE COMPANY

HAS ALSO STRUCK A $7 BILLION SHARE-SWAP DEAL WITH SOFTBANK GROUP TO RAISE ITS STAKE IN US UNIT T-MOBILE

BERLIN: 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.

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.