Market cap

T-Mobile becomes the world’s largest telecommunications carrier (by market capitalization) | Financial performance

Executives at T-Mobile US and parent company Deutsche Telekom will be particularly keen on their portfolio-tracking apps since mid-August, as the resurgent US operator approached and overtook rival Verizon Communications on market capitalization.

The crossover finally took place last week and, with the subsequent expansion, T-Mobile now has an approximate implied value of $183bn (£159bn/€184bn), up from $173bn. for Verizon.

That makes T-Mobile – considered a near-basket case a decade ago – the world’s largest telecommunications player by market value, with Verizon, Comcast, China Mobile and American Tower rounding out the top five, according to the market capitalization website. Its stock is up almost 70% since it finalized its mega Sprint takeover in April 2020 (Deutsche Telekom watch#93).

The operator remains behind Verizon on other metrics, including customers, revenue, and enterprise value (~$346 billion vs. ~$283 billion), but is obviously trending with stock market traders after having made serious inroads into the 5G era, seemingly avoiding any missteps so far in executing the Sprint merger, and continues to dangle the carrot of a massive buyout program (Deutsche Telekom watch#105 and #112).

DT’s transatlantic reset remains a work in progress

For Deutsche Telekom, the milestone will be very positive overall – perhaps accompanied by another dose of relief following its failed attempt to sell T-Mobile to AT&T in 2011.

It also probably comes with a slight bitter aftertaste; executives continue to believe that DT is not getting enough Town cred for being well positioned to leverage T-Mobile’s growth story (and a clear path to further increase its stake through optioning and/or buyouts).

DT’s 48.4% stake in T-Mobile is expected to be valued at around $89 billion, taking T-Mobile’s market capitalization at face value. But DT’s own market capitalization – which includes its European operations – only sits at around 93 billion euros, or $93 billion, so something is missing somewhere.

This apparent disconnect is preventing DT management from achieving its flagship ambition of becoming a €100 billion stock (Deutsche Telekom watch#105).

As T-Mobile expands, another challenge for DT executives is to strategically refocus and develop deeper collaborative ties with its US powerhouse. Over the past decade, he has kept T-Mobile at bay and allowed US management to do its own thing (without getting involved in European affairs).

The two operators have formed a global partnership on internet of things in February, and there have been hints that an international tie-up on enterprise connectivity is coming (Deutsche Telekom watch#112).

His positioning of home region bosses Srini Gopalan (Germany) and Dominique Leroy (Europe) on the T-Mobile board, as well as CEO Tim Höttges, CFO Christian Illek and senior M&A lieutenant, USA & Corporate Development Head Thorsten Langheim, says strengthening transatlantic ties is a growing priority for DT’s leadership team.