Deutsche Telekom struck a multi-pronged agreement with SoftBank Group to increase control over its lucrative T-Mobile US operation, while also announcing a deal to sell its Dutch unit to a consortium of private equity funds for €5.1 billion.
Starting with the deal with SoftBank, the pair jointly decreed Deutsche Telekom will receive approximately 45 million shares in T-Mobile US which are currently owned by the Japanese company.
Furthermore, Deutsche Telekom will exercise call options granted in 2020 to acquire another 20 million shares in the US operator, reinvesting $2.4 billion from the T-Mobile Netherlands sale.
The two moves will lift Deutsche Telekom’s ownership in T-Mobile US by 5 per cent to 48.4 per cent.
In exchange for the 45 million shares, SoftBank is set to receive 225 million new shares in Deutsche Telekom at a price of $20 per share, a 12 per cent premium on current trading levels, giving the Japanese player a 4.5 per cent stake in the German operator.
The deal makes SoftBank the third-largest shareholder in Deutsche Telekom after the German government and private equity company BlackRock, and helps to diversify its telecoms exposure outside Japan and into Europe.
Furthermore, Deutsche Telekom’s management will support a proposal for Marcelo Claure, CEO of SoftBank Group International and also group EVP and COO, to be appointed to Deutsche Telekom’s supervisory board.
“This is a landmark transaction that is a true win-win-win for our portfolio companies, SoftBank and Deutsche Telekom,” Claure commented.
Netherlands sale
The agreed sale of Deutsche Telekom’s 75 per cent stake in T-Mobile Netherlands comes two months after a sales process kicked off and ends long-running rumours the unit was on the chopping block.
Tele2 Group, which owns the remaining 25 per cent, also agreed to sell its stake.
A consortium of Apax Partners and Warburg Pincus will be the new owners, with the €5.1 billion equating to approximately 8.7-times the €582 million earnings T-Mobile Netherlands generated in 2020.
The funds will own a 50 per cent stake each and pledged to support T-Mobile Netherlands on its next phase of growth. The companies have also invested in a number of players in the sector in the past, including Inmarsat, Orange Switzerland, Ziggo and TDC.
Reliance Industries was reportedly poised to make a non-binding offer for the Dutch unit before the final deal was announced.
The deal is subject to customary closing conditions.
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