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March 21, 2011, 4:25 AM EDT
By Ragnhild Kjetland
(See EXT3 for more reports on the takeover.)
March 21 (Bloomberg) -- Deutsche Telekom AG shares surged as much as 16 percent after the German company agreed to sell T- Mobile USA to AT&T Inc. in a deal valued at about $39 billion in cash and stock.
Deutsche Telekom said late yesterday it will use the proceeds to slash debt by about 13 billion euros ($18.4 billion), expand in Europe and invest in its local broadband business. The company, which retains T-Mobile USA’s almost $16 billion in debt as part of the AT&T deal, will funnel about 5 billion euros into share buybacks.
“The consensus was that Deutsche Telekom is facing a structural problem in the U.S. and as such the disposal addresses that and removes a major obstacle to the equity story,” said Saeed Baradar, a telecommunications sales specialist at Societe Generale in London. “In this environment, $25 billion in cash is a major positive.”
Chief Executive Rene Obermann had been considering options for the business, including a possible deal with Sprint Nextel Corp., as the unit struggled to compete with larger rivals. The company held negotiations with five different companies about the future of T-Mobile USA, Chief Financial Officer Timotheus Hoettges said on a conference call today.
--Editors: Simon Thiel, Heather Harris
To contact the reporter on this story: Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net
To contact the editor responsible for this story: Simon Thiel in London at sthiel1@bloomberg.net
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(See EXT3 for more reports on the takeover.)
March 21 (Bloomberg) -- Deutsche Telekom AG shares surged as much as 16 percent after the German company agreed to sell T- Mobile USA to AT&T Inc. in a deal valued at about $39 billion in cash and stock.
Deutsche Telekom said late yesterday it will use the proceeds to slash debt by about 13 billion euros ($18.4 billion), expand in Europe and invest in its local broadband business. The company, which retains T-Mobile USA’s almost $16 billion in debt as part of the AT&T deal, will funnel about 5 billion euros into share buybacks.
“The consensus was that Deutsche Telekom is facing a structural problem in the U.S. and as such the disposal addresses that and removes a major obstacle to the equity story,” said Saeed Baradar, a telecommunications sales specialist at Societe Generale in London. “In this environment, $25 billion in cash is a major positive.”
Chief Executive Rene Obermann had been considering options for the business, including a possible deal with Sprint Nextel Corp., as the unit struggled to compete with larger rivals. The company held negotiations with five different companies about the future of T-Mobile USA, Chief Financial Officer Timotheus Hoettges said on a conference call today.
--Editors: Simon Thiel, Heather Harris
To contact the reporter on this story: Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net
To contact the editor responsible for this story: Simon Thiel in London at sthiel1@bloomberg.net
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