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Investor View: Deutsche Telekom sale of U.S. unit to AT&T

FRANKFURT | Mon Mar 21, 2011 12:22pm EDT

(Reuters) - Deutsche Telekom shares soared on Monday after the group agreed the sale of its T-Mobile USA unit to AT&T for $39 billion, paving the way for the world's biggest M&A deal this year and Germany's biggest in a decade.

Investors and analysts said that the deal is likely to be subjected to a challenging regulatory review, but added that it is a sensible step allowing Deutsche Telekom to focus on organic growth and return cash to shareholders.

Here is what some analysts, traders and investors said:

ANDREAS MARK, EQUITY FUND MANAGER, UNION INVESTMENT

"With the sale, Deutsche Telekom is solving its U.S. problem in a single step. The group has not got the necessary size to remain independently active in the U.S. market."

STEPHAN THOMAS, FUND MANAGER AT FRANKFURT TRUST, holds 8.5 million shares in Deutsche Telekom:

"The deal came as a surprise, but as a positive one. After the newsflow of the past week, we didn't expect Deutsche Telekom tying up with the market leader (AT&T). Obviously, it's a good price. But there are a couple of questions that need answering: 1) Will the deal go through as it is? The U.S. antitrust bodies will have their say in this deal. 2) Where will Deutsche Telekom's growth come from in the mid-term?"

A TOP 20 INSTITUTIONAL SHAREHOLDER IN DEUTSCHE TELEKOM

"The management team has taken small steps in the right direction. So far, this is the biggest step and they are building up confidence, with that they may go back to the acquisition trail, but for now they have announced a share buy-back and obviously they have to reduce debt as well."

A TOP 20 INSTITUTIONAL SHAREHOLDER IN DEUTSCHE TELEKOM

"It's a good deal from a financial and share-price perspective, and actually I think it is the best home for the assets in terms of the synergy with AT&T. Deutsche Telekom gets a chance to capture some of those synergies up front and with a small stake in AT&T going forward, they will still be able to benefit from those synergies as AT&T delivers on them."

"From the consumer perspective, I think the deal will enable AT&T to get more spectrum and easier and accelerated coverage of the rest of the U.S. in terms of 4G."

MARKUS HUBER, SENIOR TRADER, ETX CAPITAL IN FRANKFURT

"This deal could open the door to other opportunities in future (for Deutsche Telekom). Considering Deutsch Telekom's foothold in the U.S. market, and how it has had to battle for it in the past, this is certainly not a bad deal. With regard to the tensions in the market at present, Deutsche Telekom should also be happy with the price of $39 billion."

(Reporting by Edward Taylor, Christoph Steitz and Josie Cox in Frankfurt, Cecilia Valente and Sinead Cruise in London; Editing by Louise Heavens)

Credit: Reuters (www.reuters.com)