Deutsche Telekom CEO closes in on US deal after third try

Bloomberg

Deutsche Telekom AG is the closest it’s ever been to securing the US wireless mega-merger that Chief Executive Officer Tim Hoettges has attempted to clinch three times.
The German phone company rose the most in almost 10 months on Monday after clearing a major hurdle for the $26.5 billion takeover of Sprint Corp by its T-Mobile US Inc unit three days earlier, when the US Justice Department approved the combination.
Getting the deal across the finish line would deliver the greater heft Hoettges has been seeking for T-Mobile for nearly a decade, with Deutsche Telekom facing a stagnant European telecom market.
“It would add to Hoettges’s success as a dealmaker after a string of recent M&A approvals in Europe,” said Erhan Gurses, an analyst at Bloomberg Intelligence.
American Dependence
The Sprint combination gives Deutsche Telekom a stronger vehicle to expand in the profitable US market and test new technologies such as 5G before they are introduced elsewhere. It dilutes its reliance on Europe, where carriers are struggling to grow amid fierce competition and where its biggest German rival — Vodafone Group Plc — recently won clearance to buy continental cable assets from Liberty Global Plc.
Deutsche Telekom rose as much as 3 percent in Frankfurt, the steepest intraday gain since October 10, 2018.
T-Mobile’s importance for Deutsche Telekom has grown steadily and currently accounts for around half of group sales, up from about a third in 2014 — the year before Hoettges took over as CEO. With the Sprint deal, most of the Bonn-based company’s cash would be generated in the US.
T-Mobile and Sprint scrapped a previous plan to merge in 2014 after meeting resistance in Washington. Their second attempt failed in late 2017, when Hoettges and Masayoshi Son, the chairman of SoftBank — Sprint’s owner — couldn’t agree on how to structure control of the combined entity, people familiar with the matter said.
Hoettges brought the merger back from the dead a few months later. On January 1, 2018, he took out his phone and tapped out an SMS to Son, wishing him a happy New Year and expressing regret that the merger hadn’t happened. It reignited a conversation that culminated in an agreement to pursue a takeover that’s poised to reshape the wireless industry.
By then, T-Mobile had increased its lead over Sprint, which hasn’t had a profitable year in more than a decade, allowing Hoettges to claim greater control in the attempt to combine the two companies.
Deutsche Telekom’s US adventure began in 2001, when then-CEO Ron Sommer bought Voicestream for $44 billion.
Deutsche Telekom will own 42 percent of the new business and appoint nine of its 14 directors, with Hoettges serving as chairman. Legere will lead it as CEO, backed by his top lieutenant, Michael Sievert, as COO.