The collapse of the attempt by T-Mobile US to merge with Sprint Corp will underline its importance as a driver of growth when its main owner, Deutsche Telekom, reports quarterly results this week, says Reuters.
T-Mobile, under charismatic CEO John Legere, keeps hitting home runs, already reporting that it added 1.3 million net customers in the third quarter – the 18th time in a row it has achieved the feat.
T-Mobile reported revenues in the third quarter that topped US$10 billion for the first time, up 8 percent.
The picture for Deutsche Telekom group on Thursday is likely to be different, with analysts on average forecasting group revenues of 18.4 billion euros (US$21.4 billion) – a year-on-year gain of just 1.6 percent, the news agency said.
That would reflect barely positive growth in Telekom’s crowded and heavily regulated home market, where sales rose just 0.4 percent in the first half, and at its European holdings that were ahead by just 1.5 percent.
Deutsche Telekom, which has toyed with options for its US business for years, put a brave face on the unraveling of the deal on Saturday night, saying T-Mobile would continue its successful growth strategy.
“We supported our American subsidiary to invest more than US$40 billion over the last years, thus building a basis for strong growth in the upcoming years,” CEO Tim Hoettges said.
But some investors wonder whether the best years may now be behind T-Mobile, whose shares have risen ninefold from the low they hit after the global financial crisis to a peak of US$68 in June.
“I’d just love them to sell it,” one UK-based fund manager who holds Deutsche Telekom stock said last week as reports surfaced that the T-Mobile-Sprint talks were in trouble.
At T-Mobile’s latest share price, Deutsche Telekom’s 64 percent stake would be worth US$31 billion.
“There’s a tendency to run things forever, sometimes, and then you end up selling at the wrong times,” the fund manager added.
Together, T-Mobile and Sprint would have had about 130 million customers, putting a merged entity a close third in the United States behind market leaders AT&T and Verizon.
Alone, T-Mobile has 70.7 million customers, requiring a lot more good quarters to close the gap on its own, Reuters said.
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