UPDATE 2-Telekom sees T-Mobile sale at $35 shr as too low-source

Thu Aug 28, 2014 4:25pm EDT

(updates with source countering Bloomberg report)

Aug 28 (Reuters) - Deutsche Telekom AG sees potential offers which value its T-Mobile US Inc unit at $35 a share as being substantially too low, a person familiar with the matter said on Thursday, countering a report from Bloomberg.

Bloomberg earlier reported that Deutsche Telekom is willing to negotiate a sale of T-Mobile if an offer values the business at $35 or more, citing a source.

Deutsche Telekom earlier this month rejected an offer from Iliad SA for T-Mobile.

Spokeswomen for T-Mobile and Iliad declined to comment on the report.

T-Mobile US shares were up 1.36 percent at $29.84 on the New York Stock Exchange.

Earlier this month, Sprint Corp walked away from a $40-per-share bid for T-Mobile after facing staunch opposition from regulators who warned they want to maintain four competitors in the U.S. market.

Deutsche Telekom derives about a third of its sales and a fifth of core profit from the United States, but believes T-Mobile US lacks the critical mass, frequencies and capital to compete with leaders AT&T Inc and Verizon Communications Inc.

T-Mobile has turned around years of subscriber losses through campaigns that have eliminated contracts, restructured pricing plans and sparked price slashing across the industry.

The company added more postpaid subscribers than all of its competitors last quarter. (Peter Maushagen and Edward Taylor in Frankfurt, Marina Lopes, additional reporting by Karen Rebelo in Bangalore, and Leila Abboud in Paris; Editing by Jane Barrett, Matthew Lewis and Tom Heneghan)