Billion-dollar agreement: Deutsche Telekom affiliate acquires in the United States
T-Mobile, once a source of concern within its parent company Telekom, has now become a profit powerhouse. The mobile phone subsidiary is making waves in the US market by targeting competitors, including their customers and some frequencies.
Nearly four years after the merger with Sprint, T-Mobile is making a major move in the US mobile phone market with another billion-dollar acquisition. The German giant revealed that it would purchase nearly all of rival US Cellular's mobile phone business for about $4.4 billion. This includes customers, branches, and certain mobile phone frequencies.
"This transaction will give our customers improved coverage and faster speeds," said US Cellular CEO Laurent Therivel. Although Verizon initially expressed interest in the company, US Cellular ended up selling part of its business. As a result, the company's shares in the US stock market surged by as much as 13%. Telephone & Data Systems, US Cellular's major shareholder, saw its shares rise by almost 10%. T-Mobile's shares only gained slightly less than one percent, while Verizon's shares lost almost half a percent.
No Effect on Annual Objectives or Dividends
T-Mobile plans to pay a portion of the purchase price in cash. Besides, it will take on up to two billion dollars in debt from US Cellular. According to T-Mobile, this won't affect their yearly goals or dividends for shareholders. Estimated savings amount to around one billion dollars. Integration costs are expected to be between 2.2 and 2.6 billion dollars.
If approved by the antitrust authorities, the transaction should be complete by the middle of the following year. Following the deal, US Cellular will retain about 70% of its previously owned mobile phone frequencies and 4400 transmitters. T-Mobile will lease at least 2600 of these facilities long-term.
US Cellular has seen decreasing sales and failed to meet expectations in recent quarters. In response, the company announced last year it would consider strategic options for its future. On the other hand, T-Mobile continues to perform well: the mobile phone provider has demonstrated strong customer growth in recent quarters and looks positively toward the future. The one-time problem child of Deutsche Telekom now drives revenue and profit for the Bonn-based conglomerate.
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Source: www.ntv.de
