T-Mobile plans to buy back $14 billion worth of stock


T-Mobile US

The US subsidiary of Deutsche Telekom is worth more than 182 billion dollars on the stock exchange.

(Photo: LightRocket/Getty Images)

san francisco The US subsidiary of Deutsche Telekom, T-Mobile UShas announced a $14 billion share buyback program. As early as this year, securities worth up to three billion dollars could be bought back, T-Mobile announced in a mandatory notification to the US Securities and Exchange Commission.

The entire program is scheduled to run until the end of September 2023. "The exact timing, price and scope of the buybacks will depend on current share prices, general economic and market conditions," T-Mobile said.

The step above all could be that Deutsche Telekom help. Because she does not hold the majority of shares in her US subsidiary. According to the calculations of the service provider S&P Global Market Intelligence is responsible for Telekom's share T-Mobile US at 48.25 percent. The corporate management in Bonn wants to close the threshold to a majority stake. A special rule secures Telekom the majority of voting rights - but this deal expires in two years.

Actually, Telekom could simply close the majority of shares by buying additional paper. But that would be expensive. Already today the daxGroup accumulated record debt of 146 billion euros.

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And buying shares would be particularly expensive right now. Because T-Mobile has made strong gains on the stock exchange. For the first time, the company has risen to become the most valuable mobile operator in the world and has US rivals Verizon and AT&T left behind. At the close on Thursday, T-Mobile's market capitalization was more than $182 billion.

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Thanks to the share buyback, Telekom would not have to buy any new shares in order to acquire a majority stake in T-Mobile. The US subsidiary has already announced: "Deutsche Telekom AG, the company's main shareholder, currently has no intention of selling common shares as part of the buyback program." , the percentage increases the daxgroup holds its US subsidiary.

It was initially unclear what percentage Deutsche Telekom would hold in T-Mobile after the buyback program was completed. T-Mobile initially left a request unanswered.

Expert: $14 billion won't be enough

The value of the shares ultimately depends on the value at which the shares are bought back. If exchange rates remain constant, the value of the Telekom shares in the subsidiary could increase to more than 52 percent.

Roger Entner, founder of the telecommunications specialist Recon Analytics, was convinced: "The 14 billion dollars will probably not be enough for Telekom to get the majority of the shares." The reason is a special rule that Deutsche Telekom imposed due to an acquisition in the United States with the Japanese investor soft bank had closed. This provides that soft bank additional T-Mobile shares are issued, the price of the mobile operator should remain above $150 per share for 45 days. At the close on Thursday, T-Mobile shares were worth around $145 a share.

“T-Mobile is doing well. It is very likely that the stock will rise to more than $150," said Entner with conviction. But that could activate the special rule with Softbank and thus dilute the Telekom share in T-Mobile. "Paradoxically, the management of Telekom in Bonn has to hope that T-Mobile's price will not continue to rise," said Entner.

>> Read here: From flop to market leader: T-Mobile becomes the world's most valuable mobile operator

But there is another way for Telekom and T-Mobile: the share buyback program could be increased. On Wednesday, T-Mobile CFO Peter Osvaldik spoke at a conference of the Bank of America said, "We remain optimistic that up to $60 billion in potential shareholder returns is possible in our business between the years 2023 and 2025. So it's a great time to be a T-Mobile shareholder.” A year earlier, T-Mobile CEO Mike Sievert announced a $60 billion share buyback program.

The now communicated $ 14 billion for share buybacks could only be the beginning.

More: From flop to market leader: T-Mobile becomes the world's most valuable mobile operator.



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