T-Mobile forced to take action amid Sprint takeover rumors
updated 11:55 pm EDT, Tue September 15, 2009
Shareholders said to be ready to force changes
Amid rumors that Deutsche Telekom, T-Mobile's parent company, is considering a takeover bid for the US rival Sprint, sources claim the German company's biggest shareholders are preparing to force changes, according to the Financial Times. Although both companies have remained mum on any private negotiations, the report corroborates earlier suggestions that D Telekom has become frustrated with the performance of its US subsidiary.
The sources claim the German government and private equity group Blackstone, which together control 37 percent of D Telekom, will try to spearhead strategic changes if CEO René Obermann is unsuccessful at turning the company around. Any deals focused on "transforming the business" are said to be "not yet an option."
Others disagree with the assertions that DT is preparing a Sprint takeover. The company's most powerful shareholders allegedly supported a strategy session that came to consensus that T-Mobile should continue investing in a 3G network.
“There is a debate about whether T-Mobile USA has a temporary problem – global recession – or a strategic one: that it is simply too small to achieve the necessary economies of scale to be profitable," said a source familiar with D Telekom's top shareholders. CEOs from both DT and T-Mobile USA allegedly claim the situation is temporary, although the source claims the shareholders remain skeptical.
DT first considered a Sprint acquisition last year, but Obermann argued against the idae. Despite the potential to bring T-Mobile from fourth place to second place among US carriers, the transition could face a wide range of legal and technical challenges.
