Former Telstra CEO Sol Trujillo is working to secure private equity support to acquire T-Mobile USA from parent Deutsche Telekom, according to Bloomberg sources. Although Trujillo has so far been unsuccessful in securing an investor, he has held talks with Blackstone Group and KKR & Co about bidding for all or part of T-Mobile USA.
Deutsche Telekom is open to the sale of its US subsidiary, according to the sources, and would use any cash from a sale to invest in its European assets. However, the private equity firms are cautious about investing in T-Mobile USA due to the size and cost of financing a buy-out, with T-Mobile USA potentially worth around US$30 billion.
One source said Trujillo has also been gauging private equity interest in buying US number-three Sprint Nextel.
T-Mobile USA has been struggling following the failure of a proposed US$39 billion merger with AT&T which was abandoned in December 2011. With the termination of the merger discussions, T-Mobile USA received US$3 billion in cash from AT&T as well as US$1 billion worth of spectrum and a long-term 3G roaming agreement. The spectrum swap was approved by the FCC in April.
Following the collapse of the merger, the US number-four operator announced that a total of 2,800 jobs would be cut as it looked to preserve cash for investment in its network. AT&T blamed the job cuts on the failure of the merger deal.
T-Mobile has struggled to compete in recent years due to limited spectrum holdings and is currently attempting to sell some of its towers. CEO Philipp Humm left the division in June to join Vodafone, with chief operating officer Jim Alling taking over as interim CEO while a permanent replacement is found.