A decade after paying $28.5 billion for T-Mobile USA, Deutsche Telekom AG (DTE) is now selling the company for $39B to AT&T. This would be a 25% premium over the price it paid less any investment capital put into the company. T-Mobile USA was not a good investment for Deutsche Telekom had the parent company has been a weak partner with tepid dedication to the US market controlled by AT&T and Verizon lobbyist. The company has lost money for the fifth consecutive year and lacked the investment capital from the parent company to adequately compete. T-Mobile USA’s net income fell 7.9% to $1.35 billion last year. If T-Mobile was a stand alone publically trading company it would have roughly have a $16.8 billion market capitalization with a PE ratio of 12.4 as the average. No wonder why they took the deal at $39B.
Verizon and AT&T pump billions of dollars into advertising and marketing to drown out the smaller players in the market while charging 25% premium for their services. Consumers are getting screwed by these large corporate giants and government regulators continue to look the other way and ignore unfair competitive issues.T-Mobile obviously needs a new home but not in the hands of the largest competitor AT&T who will screw its customers. It makes more sense for a company like Sprint or Google to buy the company but they are not likely to pay the price of $40 billion.
Why is Deutsche Telekom Selling T-Mobile?