Deutsche Telekom AG announced that it has decided to reject the $15-billion takeover bid of the French carrier Iliad SA for its stake in T-Mobile US. The Germany-based company also said that its second-quarter profit jumped by more than a third due to the companys aggressive strategy, which is trying to expand its customer base in America.
The Chief Executive Officer of Deutsche Telekom AG – Mr. Tim Höttges – revealed that the company had not received a bid for its U.S. subsidiary T-Mobile that creates additional value. Mr. Höttges said in the statement, which was cited by the Financial Times: “We have an organic business in the US that is going well. That has to be our focus. At the present moment, we do not have an offer on the table that offers additional value on top of what we have organically.”
Deutsche Telekoms Chief Executive Officer also explained that he is open to a transaction in the U.S., in case the value of the deal is sufficient. He shared that he found the offer of Iliad SA surprising. Currently, the Germany-based company holds a 67% stake in the T-Mobile U.S.
The net profit of the company over the second quarter of the current financial year increased by 34% and reached €711 million (951.6 million dollars). In comparison, the company posted a net profit of €530 million over the same period a year ago. Deutsche Telekom AG also reported that its revenue declined by 0.3% to €15.11 billion. The companys earnings were pushed by the performance of its U.S.-based subsidiary T-Mobile, which swung back to profit over the second fiscal quarter.
About one third of the sales and one fifth of the core profits of Deutsche Telekom AG are generated on the territory of the U.S. However, the company does not believe that its subsidiary T-Mobile has enough critical mass, frequencies and capital in order to be a worthy rival to the market leaders in the region Verizon Communications and AT&T.
Deutsche Telekom AG was losing 1.76% to trade at €11.16 per share by 8:05 GMT. The companys shares have gained 14.46% over the past twelve months, giving Deutsche Telekom a market valuation of €51.52 billion. According to the information published on the Financial Times, the 30 analysts offering 12-month price targets for Deutsche Telekom AG have a median target of €12.50, with a high estimate of €15.00 and a low estimate of €8.20. The median estimate represents a 10.04% increase from the last price of €11.36.
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