A Possible Deutsche Telekom-T-Mobile Tie-Up Could Be Huge, but Investors Aren’t Sold

T-Mobile is at the center of a new report about a possible corporate combination with its majority owner, Deutsche Telekom. The report says Deutsche Telekom has discussed creating a new parent company that would exchange shares for stock in both companies, potentially bringing them together under one structure.

According to PhoneArena, the discussions are still at an early stage and many details have not been finalized. The report says the combined company could be listed on a U.S. exchange as well as a major European exchange, although there is no assurance that the talks will lead to a completed deal.

The report notes that Deutsche Telekom already owns 53.7% of T-Mobile. It also says the German government and state-owned lender KfW together own 28% of Deutsche Telekom, which means political support could be an important factor if the companies decide to move forward.

Investors reacted cautiously after the news surfaced. Another PhoneArena report shared that T-Mobile shares fell more than $5 in pre-market trading, down 2.84% to $189.85, while Deutsche Telekom shares dropped more than 3% in Frankfurt trading. The report said the decline reflected concerns about the size, cost, and complexity of a deal of this scale, along with doubts about whether it will ultimately happen.

If completed, the combination could create the world’s most valuable wireless company by market capitalization, ahead of China Mobile, according to the report. T-Mobile is valued at $215.3 billion, while Deutsche Telekom has a market capitalization of about $166 billion.

The timing of the reported talks is notable because T-Mobile is also in the middle of a broader shift toward a more app-based model for customer transactions through its T-Life app. That transition is expected to reduce costs, but it has also drawn complaints from some customers and employees, adding another layer of uncertainty as investors assess the possibility of a major transaction.

Source: PhoneArena, PhoneArena