Deutsche Telekom Mulls T-Mobile Merger In The US

The Chief Executive Officer of Deutsche Telekom, Rene Obermann, has said that a merger for its T-Mobile USA division is a possibility.

Speaking at an annual shareholders meeting in Germany, Obermann admitted: "We do not exclude any option for the T-Mobile unit in the U.S., also not a merger. A complete sale is unlikely. You understand that I can't say more in public on T- Mobile USA."

The complete sale being "unlikely" is a reference to the previous failed acquisition of T-Mobile USA by AT&T at the end of last year, when a proposed $39 billion deal fell through because the Department of Justice and FCC decided the move was against the best interests of the US mobile market.

So while parent Deutsche Telekom has evidently decided it has to keep the company, a merger may be the best option, certainly according to some analysts.

Alexandre Iatrides, an analyst at the Paris based Oddo & Cie, commented: "We don't see any value creation by T-Mobile USA if it stays as a stand-alone company. The alternatives would be a merger or some kind of network-sharing agreement with MetroPCS or Sprint Nextel."

Bloomberg's sources have indicated that Deutsche Telekom is indeed discussing a possible merger with MetroPCS.

The doubts over T-Mobile's future haven't exactly helped the company's performance of late, so whatever avenue Deutsche Telekom is thinking of taking, it will doubtless feel the pressure to make a decision sooner rather than later.

Source: Bloomberg