Deutsche Telekom AG (DTE) Freezes Efforts to Sell T-Mobile US (TMUS)

Deutsche Telekom AG (ETR:DTE) decided to freeze its effort to sell T-Mobile US Inc (NASDAQ:TMUS) temporarily due to the upcoming auction of radio waves, according to Reuters based on information from people familiar with the situation.

The German telecommunications company owns 65.4% of T-Mobile, and it has been seeking for buyers for the U.S. wireless carrier. In 2014, Sprint Corporation (NYSE: S) tried to acquire T-Mobile but failed to push through a deal due to regulatory hurdles.

Deutsche Telekom stated that it was not under pressure to sell T-Mobile, but it is would consider any offer. Its decision delay the sale would give potential buyers time to wait for a more favorable political environment towards mergers and acquisitions in the U.S. telecommunications industry, according to the sources.

The U.S. Federal Communications Commission (FCC) is scheduled to begin the auction for the 600MHz spectrum by the end of this month. Industry observers expected the auction to last for months. Last year, the Commission raised a record $44.9 billion in the auction of AWS-3 airwaves.

A person familiar with the matter said, “During that period, there will be no M&A activity in the U.S. telecoms sector.”  Participants in the auction are prohibited from engaging in any merger or partnership discussions during the weeks and after the auction process.

T-Mobile could spend as much as $10 billion in the auction

T-Mobile recently stated that it might spend as much as $10 billion in the auction. The company managed to nearly triple is net profit the fourth quarter after increasing the number of its customers by more than 2 million.

Last year, T-Mobile surpassed Sprint as the third-largest wireless carrier in the United States. Market observers suggested that Deutsche Telecom has been trying to sell T-Mobile for years to take advantage of its recovery and generate profit.

T-Mobile stock performance

The shares of T-Mobile were trading $38.49 per share, up by 3.75% around 2:51 in the afternoon in New York. The company gained more than 16% in stock value over the past year.

Equity analysts at Deutsche Bank (NYSE:DB) recently initiated coverage on T-Mobile with a “Buy” rating and price target of $46 per share. Vetr analysts also recommended a “Buy” rating on the stock with a price target of $41.23 per share.