Deutsche Telekom is exploring a possible tie-up with T-Mobile US to create a $300 billion telecoms giant. If the deal comes through, it might overtake Vodafone-Mannesmann's $203 billion merger in 1999 to become the biggest M&A deal ever. The German group already controls 53% of the U.S. unit.
But the deal would potentially bring both companies under one entity in a bid to reignite growth in a stagnating telecoms sector. A merger would also provide the combined entity the scale to compete in both the U.S. and Europe.
The merger talks, still at an early stage, could create a company with a market capitalization of nearly $300 billion, making it the world's most valuable telecoms group with more than 200 million mobile subscribers.
Deutsche Telekom's ownership of T-Mobile dates back 25 years and has fluctuated over time. Since 2020, the German group has moved to tighten its grip. CEO Timotheus Hoettges is chairman of T-Mobile's board.
Morgan Stanley analysts said that scale could bolster financial firepower and support further acquisitions.
"The real appeal is gaining the benefits of control while still preserving the agility and valuation upside of T-Mobile as a standalone business," said PP Foresight analyst Paolo Pescatore, adding that T-Mobile has increasingly become the "engine" of Deutsche Telekom.
The deal would also require support from the German state, Deutsche Telekom's single biggest shareholder, with a 28% stake held roughly equally by the government and state-lender KfW, whose holding could be diluted in a merged group.
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