Deutsche Telekom CEO Timotheus Hottges

Deutsche Telekom (DT) regained much wanted control over its U.S. subsidiary T-Mobile US in a move the German telecom giant said will help solidify its financial footing.

DT CEO Timotheus Hottges told investors today during the carrier’s 2023 shareholders’ meeting that it issued Japan’s SoftBank 225 million treasury shares for a 3.7% stake in T-Mobile US. Those shares cost DT nearly $5.8 billion, but provided it with a controlling stake in the U.S. operator.

"This is an important component of our success," Hottges said of regaining ownership control of T-Mobile US.

DT was sitting on a 48.4% stake in T-Mobile US at the middle of last year, but wanted “to achieve a clear 51% shareholding in the U.S.,” Hottges said during DT’s second quarter of 2022 earnings call.

Hottges touted several financial benefits in acquiring clear control of what he called “the world’s most valuable telecommunications company.” This included T-Mobile US’ surge in value over the past decade, which accelerated with its $26.5 billion acquisition of Sprint; several billion dollars in “synergies” this year; and an announced T-Mobile US share buyback plan that will further increase DT’s liquidity.

Furthering his case, Hottges also touted DT’s recent sale of its operations in the Netherlands and the sale of its tower business in Germany and Austria that generated billions of dollars in revenues for the carrier.

DT controlled 62% of T-Mobile US prior to its Sprint acquisition that closed in 2020. The deal watered down DT’s control to around 42%, with SoftBank, which owned Sprint, controlling a 27% stake. (The rest was floating in the stock market.)

Hottges also touted T-Mobile US’ 5G leadership position in the U.S., noting its 5G coverage surpassed that of “former top dogs AT&T and Verizon.” He noted that T-Mobile US’ 5G network covers 98% of the U.S. population, while DT’s European subsidiaries cover a combined 47.4% of their respective country’s populations with a 5G signal.

The U.S. carrier recently reported solid fourth-quarter and full-year 2022 results that included continued growth of its 5G-focused fixed-wireless access (FWA) product. T-Mobile US’ management placed a lot of emphasis on customer growth meeting expectations and a slight bump in average revenue per user boosting Q4 service revenues 4% year over year.

T-Mobile US also plans to grow its deep mid-band 5G spectrum coverage from 265 million potential customers at the beginning of this year, to 300 million potential customers by year-end. It’s deepening that spectrum pool by re-farming its 1.9 GHz spectrum resources that had been powering its 3G networks, and it was part of a recent Federal Communications Commission (FCC) filing that should provide it greater access to its so far untapped C-band spectrum holdings.

T-Mobile US spent nearly $10 billion on its C-band spectrum holdings, but has so far relied heavily on the deep 2.5 GHz spectrum holdings it acquired when it bought Sprint to power capacity enhancements on its 5G network.