Deutsche Telekom’s shares soared as much as 16 per cent yesterday after news it will sell its beleaguered T-Mobile US venture to AT&T for $39bn (£24bn).
The German telecoms giant will instead focus on its European operations. It says it plans to grow organically and will use the cash to pay down debt and return around €5bn (£4.4bn) to shareholders through a share buyback programme.
Investors on both sides of the deal reacted positively to the announcement, with AT&T’s stock climbing 1.64 per cent.
The UK telecoms sector received a boost as news of the acquisition fuelled a surge of confidence in the sector. Vodafone jumped 3.56 per cent after analysts saw potential gains for its 45 per cent stake in AT&T rival Verizon Wireless. Analysts say the consolidation of the US mobile space will benefit all the major players, giving them greater pricing power, higher margins and greater cash flow generation.
BT saw its shares rise 2.43 per cent. Inmarsat also gained 1.2 per cent despite analysts warning the AT&T deal could hit the long-term prospects of its lucrative tie-up with US 4G wholesale network LightSquared.
MEET THE ADVISERS
Morgan Stanley was lead adviser to Deutsche Telekom. Working on the team was its co-head of European media & comms group, Jean Abergel.
He joined Morgan Stanley in 1995. Over the last 14 years, he has worked extensively in M&A and capital raising transactions advisory, predominantly in the telecoms sector.
His experience includes a chief financial officer position at Swedish broadband company B2.
He has an MBA from the Wharton School (University of Pennsylvania) and a post grad from Ecole Centrale de Paris.
Also on the Morgan Stanley team in Europe was Dirk Notheis. Robert Eatroff, Adam Shepard and James Murray worked on the deal from the US. Other banks advising Deutsche Telekom were Deutsche Bank and Credit Suisse.
Advising AT&T were JP Morgan, Greenhill and Evercore Partners.