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March 5, 2014

T-Mobile sale to Sprint owner is reportedly less likely in the near term

While a sale of Deutsche Telekom’s 67 percent holding in T-Mobile US — with a market value of about $17 billion — to Japan’s SoftBank remains the preferred option, the German carrier is open to alternatives, said the sources, who asked not to be identified because the deliberations are private.

Deutsche Telekom chief executive officer Timotheus Hoettges told directors Wednesday that a sale of the T-Mobile US unit is less likely in the near term because of regulatory hurdles, two people with direct knowledge of the matter told Bloomberg News.

While a sale of Deutsche Telekom’s 67 percent holding in T-Mobile US — with a market value of about $17 billion — to Japan’s SoftBank remains the preferred option, the German carrier is open to alternatives, said the sources, who asked not to be identified because the deliberations are private. SoftBank is the majority owner of Overland Park-based Sprint.

One option is a disposal of some of the shares after a lockup expires in November, although that isn’t preferred because it would mean missing out on a premium from a straight sale, they said.

Hoettges also told the supervisory board at Wednesday’s meeting, held before the company’s earnings release Thursday, that he is taking a long-term view in the U.S., focusing on holding on to newly acquired customers and turning T-Mobile’s pay-as-you-go clients into more profitable postpaid subscribers, the people said.

He also plans to argue to U.S. regulators that if industry consolidation isn’t possible, smaller carriers like T-Mobile should be allowed to acquire enough spectrum in the next auctions, they said.

Andreas Fuchs, a Deutsche Telekom spokesman in Bonn, declined to comment on the meeting and the CEO comments.

T-Mobile, the smallest among the four nationwide wireless providers, has attracted the interest of SoftBank CEO Masayoshi Son, who aims to combine it with its Sprint unit, people familiar with the matter have said. Consolidation has been viewed with little enthusiasm by U.S. watchdogs concerned about rising prices.

Deutsche Telekom is trying to avoid a repeat of the 2011 botched sale of T-Mobile to AT&T, which was opposed by the U.S. government. Since then, it has merged T-Mobile with MetroPCS Communications, rolled out a faster network and used new offers to win customers from bigger rivals, including AT&T and Verizon Wireless.

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