Deutsche Telekom seeks to boost T-Mobile USA

Deutsche Telekom could raise billions of dollars for the T-Mobile USA business by issuing bonds and selling broadcast towers to bolster the independence of the US unit after failing to sell it to AT&T last month. The company has held preliminary talks with bankers about options to keep the US’s fourth-largest mobile operator competitive in the US market, where it is trailing behind far larger groups such as Verizon and AT&T, as well as Sprint Nextel, which sells the latest Apple smartphones.

Deutsche Telekom has admitted that its US arm risks being left stranded with outdated technology as its rivals move to the next generation of mobile services able to carry the increased data that is being demanded by US consumers. René Obermann, Deutsche Telekom’s chief executive, said in the wake of the deal’s collapse that the company had not come up with a plan to launch a competitive level of services using the emerging 4G technology that is set to lead the US telecoms market. Deutsche Telekom faces the prospect of being marginalized since it does not have the bandwidth necessary to carry next-generation, or LTE, services such as high-speed mobile TV and gaming. Deutsche Telekom is expected to announce a strategic update after its results in February. Sources familiar with the company said that one option discussed has been to raise funds for the US business by means of bond issuance. One source said that a fundraising would show Deutsche Telekom shareholders – who have become accustomed to high dividend payments but who will now have to forgo a windfall from the US – that T-Mobile USA would operate independently of its parent.