Analysts cheer Deutsche Telekom's sale of T-Mobile USA
Mon Mar 21, 2011 8:01am EDT
(Reuters) - Deutsche Telekom AG's decision to sell its T-Mobile USA unit to AT&T Inc in a deal valued at about $39 billion prompted at least four brokerages to upgrade the stock, and shares of the German telecom operator rose 13 percent.
"This deal, if approved, allows Deutsche Telekom to exit the United States at a price much higher than we included in our sum of the parts valuation for the business as a standalone," said UBS analysts, who upgraded the stock to "neutral from "sell."
AT&T on Sunday said it planned to buy Deutsche Telekom's T-Mobile USA to create a new U.S. mobile market leader, but the pricey purchase is likely to attract intense antitrust scrutiny over potentially higher customer bills.
The deal would potentially create an entity with a market share of 43 percent, and this will likely attract attention from both the Federal Communications Commission and Department of Justice, UBS analysts said.
Still, "given the solid valuation, and the fact that we thought T-Mobile USA would struggle to meet targets, selling is a good move," they wrote in a note to clients.
UniCredit and ESN/Equinet upgraded the stock to "buy" from "hold." HSBC raised its rating on shares of Deutsche Telekom and AT&T to "overweight.
Shares of Deutsche Telekom were trading at 10.86 euros in morning trade.
(Reporting by Isheeta Sanghi; Editing by Maju Samuel)
Credit: Reuters (www.reuters.com)
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