Marcelo Claure, CEO of Sprint Corporation (NYSE: S) and John Legere, President and CEO of T-Mobile USA (Nasdaq: TMUS) visit the New York Stock Exchange to speak to media about their announced merger.
The merger between T-Mobile US and Sprint is within reach, the head of T-Mobile’s main owner Deutsche Telekom said on Wednesday, vowing to go on the offensive to close a valuation gap with U.S. market leaders AT&T and Verizon.
Highlighting the positive market reaction after a New York judge last week dismissed a lawsuit brought by more than a dozen U.S. states trying to block the deal, Tim Hoettges said the “new” T-Mobile would have a market value of around $120 billion.
Speaking to CNBC Wednesday, Hoettges said the T-Mobile-Sprint deal was one of two “big presents” for the company, the other being growth in its business.
“We are very close to getting the merger between Sprint and T-Mobile done and then we are becoming the No. 1 in U.S.,” he said. “That is our attempt, challenging AT&T and Verizon.”
Hoettges, 57, has battled for seven years to get the U.S. deal over the line. Once completed, Deutsche Telekom would own 42% of the ‘new’ T-Mobile but have a voting stake of 67% and control of the board.
There were reports the telecommunications group wasn’t completely happy with the terms of the deal. According to Fortune, the firm wanted to renegotiate the price as Sprint’s shares had fallen since it was proposed in 2018.
Hoettges said he couldn’t comment on all the details publicly, but said “it’s still a way to go until closing” the combination of the two companies.
“This is something we’re going to discuss internally,” he said. “There’s still open legal items on the way until the closing. We will decide within our partnership how to proceed.”
Deutsche Telekom earlier forecast growth in its core earnings would slow to 3% this year after a strong fourth quarter, as it looks finally to complete a merger that would create the third-largest U.S. wireless carrier.
Europe’s largest mobile operator said it expected adjusted earnings before interest, taxation, depreciation and amortization after leases (EBITDA AL) to reach 25.5 billion euros ($27.5 billion) this year.
That is below analysts’ consensus forecast and marks a halving from the growth rate in 2019, when Deutsche Telekom’s U.S., European and German businesses all did well – helped by favorable foreign exchange rates.
With Sprint struggling during the protracted period during which the deal was pending, T-Mobile CEO John Legere has signalled he would seek to renegotiate some of its terms to reflect the changing market dynamics.
Uncertainty over the deal has weighed on the group balance sheet, as have the heavy costs of building next-generation 5G networks, forcing Deutsche Telekom in November to say it would cut its 2019 dividend.
“This is a unique story and for us, it is the biggest transaction ever made from a German company in the U.S. This is the biggest transaction in the telco space over the last 10 years.”
“We’re going to build the best 5G network. We’re going to have double the amount of spectrum so we can be very aggressive on pricing.”
Spectrum refers to the range of radio frequencies needed to make wireless mobile internet possible. Countries around the world have banked billions of dollars from top telecom companies that are trying to get access to the best spectrum bands available.
Deutsche Telekom shares were up 3.6% by 11:15 a.m. London time.
—CNBC’s Ryan Browne contributed to this article.