Deutsche Telekom to receive first dividend from US subsidiary and announces plans to divest part of its stake next year while maintaining majority ownership
Deutsche Telekom (DT) has announced receive dividends from its T-Mobile subsidiary for the first time and the US unit announced the second tranche in its shareholder return programme. T-Mobile will pay up to $19 billion dollars in dividends and share buy-backs from the fourth quarter of 2023 to the end of 2024.
Under the terms of the programme, T-Mobile US intends to declare and pay dividends of around $3.75 billion in total on a quarterly basis from 1 October this year to 31 December, 2024.
The amount available for repurchasing T-Mobile US’ shares will be minus the amount paid in dividends. The first quarterly dividend from T-Mobile US of around $750 million is set to be paid in the Q4 2023. In total, DT expects to receive around $1.8 billion after taxes in dividend payments over the next five quarters. T-Mobile intends to increase the dividend per share by around 10 percent annually.
DT to sell some T-Mobile shares
DT has also announced plans to sell a portion of its T-Mobile US stake on the market beginning in 2024, but will maintain majority ownership. The size of the stake it will sell has not yet been decided.
In mid-July 2023, DT had a 51.4% stake in T-Mobile US, which had grown over recent quarters because DT held onto the shares it gained from the first tranche of T-Mobile US’ shareholder return programme. That tranche involved T-Mobile US buying back shares for a total of $14 billion between 1 October 2022 and 30 September 2023.
DT can therefore maintain its majority equity stake in T-Mobile US if new shares of T-Mobile US are issued to Softbank in Japan, which was Sprint’s parent company. This was agreed as part of T-Mobile’s merger with Sprint in the event of the merged entity’s share price achieving a certain defined price.