* Softbank chairman approached D.Telekom in mid-May - Kyodo
* Price and finance details still to be worked out - sources
(Rewrites throughout with details on talks, adds NEW YORK
dateline, adds byline)
By Nicola Leske and Harro Ten Wolde
NEW YORK/FRANKFURT, May 29 Germany's Deutsche
Telekom AG is willing to keep a minority stake in a
deal to sell T-Mobile US Inc to Japan's Softbank Corp
, but other details such as price and financing remain
to be worked out, according to sources familiar with the
Softbank owns a majority of Sprint Corp, the third
largest U.S. wireless carrier. Deutsche Telekom owns 67 percent
of T-Mobile, which has a market value of $27.6 billion and is
the fourth-largest U.S. wireless carrier.
Earlier on Thursday, Kyodo news agency reported that
Deutsche Telekom had agreed to a Softbank plan to buy T-Mobile.
But sources familiar with the talks told Reuters that while
the two sides are keen to get a deal done, a transaction was
complicated, including the issue of getting regulatory approval
- it would reduce the number of major U.S. mobile competitors to
three from four. The sources said no decision was imminent.
Representatives for Deutsche Telekom and Sprint declined to
comment. T-Mobile US was not immediately available for comment.
Softbank Chairman Masayoshi Son has long been eager to buy
T-Mobile to merge it with Sprint, so that the new company can
better compete with market leaders AT&T Inc and Verizon
Communications. Son has said that AT&T and Verizon have a
virtual oligopoly, leading to slower broadband speeds for
consumers. He has said a Sprint-T-Mobile combination would
create a player with enough money to make massive network
upgrades and shake up the market with new services.
Two weeks ago, Deutsche Telekom Chief Executive Timotheus
Hoettges said he was open to any consolidation in the U.S.
telecoms market. An exit from the U.S. would allow the German
group to invest more in upgrading its network in its home
market, as well as beef up its operations across Eastern Europe.
But the U.S. Federal Communications Commission chairman and
the U.S. Justice Department chief have repeatedly raised
concerns about such a tie-up, including the risk that it could
lead to higher prices for consumers. U.S. regulators previously
rejected AT&T's $39 billion takeover bid for T-Mobile US in
As a break-up fee from the failed deal, AT&T gave T-Mobile a
chunk of cash and mobile spectrum, which rejuvenated T-Mobile
and allowed it to start winning customers again. Regulators say
T-Mobile's recent success shows that the market can sustain four
Sources familiar with the Softbank-Deutsche Telekom talks
said any deal would depend on whether they can persuade
regulators to change their minds.
The two sides have been chipping away at other issues.
One possibility is for Deutsche Telekom to retain a roughly
15 percent in T-Mobile US as part of a deal, the sources said.
That would help reduce the size of the equity check that Sprint
has to write for T-Mobile US, while giving Deutsche Telekom the
chance to benefit from potential synergies from the merger, they
Deutsche Telekom may also be more accommodating with
Softbank regarding a break-up fee than it was with AT&T, the
sources said. That is because T-Mobile is likely to be the
surviving brand and its CEO, John Legere, is likely to lead the
new combined company, thus avoiding a loss of subscribers and
momentum it had to contend with during the drawn out regulatory
process with AT&T, two of the sources said.
Earlier this month, a source told Reuters that Sprint was
also meeting with banks to work out funding for its bid for
smaller rival T-Mobile US, carrying an estimated $50 billion
One event that will drive a decision is the looming spectrum
auction in the United States, which is expected to happen in the
first half of 2015, one source familiar with Deutsche Telekom's
The auction offers carriers a chance to buy access to
airwaves that are valued for their strength and reach. But the
rules for the sale are dependent on the current competitive
landscape, and if Sprint and T-Mobile were to combine, the FCC
would have to rework them. [ID: nL1N0O11IT]
Deutsche Telekom shares were down 0.3 percent, while
T-Mobile US shares were up 0.7 percent and Sprint's shares
gained 1.7 percent.
(Additional reporting by Sruthi Ramakrishnan in Bangalore,
Peter Maushagen and Christoph Steitz in Frankfurt, Leila Abboud
in Paris and Soyoung Kim in New York; Editing by Sophie Walker
and Grant McCool)