Deutsche Telekom Could Sell T-Mobile Stock after Lockup

NEW YORK (TheStreet) -- Deutsche Telekom could begin selling down its controlling stake in T-Mobile (TMUS) after the German conglomerate was unable to orchestrate a merger of its U.S. wireless arm with Sprint (S), Bernstein Research analysts said.

In October, an 18-month lockup period that precluded Deutsche Telekom from selling its T-Mobile shares expires, giving the company an ability to begin paring its position in the U.S. wireless carrier through ordinary stock sales. Alternatively, the lockup expiry could also pressure interested T-Mobile buyers to begin negotiating a deal.

With Sprint out of the mix, analysts now see DISH Network (DISH) as a credible buyer of T-Mobile. DISH Network has shown some signs of interest after the satellite TV provider narrowly lost out to SoftBank on the sweepstakes for Sprint. Meanwhile, T-Mobile recently rejected an un-solicited and un-financed cash offer for 56% of the company by French telecom Iliad.

If speculation of consolidation has driven the discussion of telecom stocks in 2014, especially with regard to Sprint and T-Mobile, Deutsche Telekom’s looming lockup expiry may be an under-appreciated back story.

When Sprint formally announced it was abandoning efforts at an offer for T-Mobile the news sent CEO John Legere into a frenzy on Twitter. It also caused analysts at Bernstein to raise the prospect Deutsche Telekom may simply sell down its T-Mobile stake, after years of regulatory setbacks in consolidation efforts.

"Deutsche Telekom (DT) still has several exit options, the best strategically being DISH -- would bring a material amount of spectrum, a customer base, the potential for video bundling, and experience in the U.S. market -- unlike international buyers (e.g., Iliad) who bring nothing except cash and likely overly optimistic assessments of the transferability of their capabilities," Bernstein Research said.

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