Deutsche Telekom eyes merger with T-Mobile US

BONN, GERMANY — Deutsche Telekom is weighing a full merger with its American mobile arm T-Mobile US, a move that could create one of the world’s largest telecommunications groups and strengthen the German carrier’s hand in future dealmaking, Financial Times reports.

Holding company structure under consideration

Sources familiar with the matter said Deutsche Telekom is exploring the creation of a new holding company that would make an all-stock bid for shares of both its existing operations and New York-listed T-Mobile US. 

The German telecoms group already holds a 53 percent stake in T-Mobile US, making it the American carrier’s largest shareholder.

The proposed entity would likely be headquartered in a European country other than Germany, according to one person briefed on the talks. The holding company could also pursue dual listings on a major European stock exchange and in the United States.

Deutsche Telekom, Europe’s largest telecommunications group, carries a market capitalization of more than €142 billion (US$153 billion). T-Mobile US, which merged with Sprint in 2020, now competes head-to-head with Verizon and AT&T and is valued at US$215 billion.

In a joint statement, the companies said: “As per our usual practice, T-Mobile and [Deutsche Telekom] do not comment on speculation regarding our corporate activity, nor are there specifics to comment on.”

Regulatory and political hurdles loom

Discussions remain preliminary, and sources cautioned that a deal is far from certain. The two companies have reportedly considered a full tie-up for years without moving ahead.

Any transaction would likely require regulatory and political clearance in both Germany and the United States. The German government owns roughly 14 percent of Deutsche Telekom, while state development bank KfW controls a similar stake, giving Berlin a significant voice in the outcome.

Deutsche Telekom chief executive Tim Höttges, who also chairs T-Mobile US, has long argued the American market is more favorable for mobile operators because of its consolidated nature compared with Europe.

James Ratzer, an analyst at New Street Research, said a tie-up would give Deutsche Telekom “more control over future [mergers and acquisitions] in the US.”

“This deal strengthens DT’s long-term position as a European shareholder in the US as it also makes it harder for anyone to ever make an offer to buy out T-Mobile in future US consolidation,” he added.

For the outsourcing industry, a combined Deutsche Telekom-T-Mobile entity could accelerate back-office consolidation and reshape vendor relationships across the global telecoms value chain. 

Large-scale carrier mergers typically trigger waves of customer service streamlining, IT reorganization, and network operations restructuring — work that often flows to BPO providers in the Philippines and India, reinforcing their roles as key service delivery hubs for the world’s largest carriers.