T-Mobile’s Gopalan turns to home internet and AI after a 25% slide

T-Mobile US chief executive Srini Gopalan declined to comment on a possible merger with parent Deutsche Telekom, days after Elliott built a stake to oppose it. A full combination would put the holding company outside Germany and cut the German state and KfW’s joint holding from about 28% to roughly 17%.

T-Mobile US chief executive Srini Gopalan is selling home internet and AI as the growth story. He told Bloomberg he will not manage the company to a quarterly share price, Bloomberg reported.

The shares are down 25% since he was named to the job last September. Second-quarter revenue missed and subscriber growth fell 13% year on year.

He would not discuss the merger. Elliott Investment Management has built a stake in parent Deutsche Telekom and wants the plan dropped in favour of buybacks.

That is the story sitting inside the interview. Deutsche Telekom owns just over 53% of T-Mobile US.

The German government owns about 14% of Deutsche Telekom. The state development bank KfW owns roughly another 14%.

The proposal is a full combination rather than a buyout. A new holding company would make an all-share bid for both and list on both sides of the Atlantic.

It would probably be incorporated outside Germany, possibly in Ireland, on the model of the 2018 Linde and Praxair merger.

That is what makes it a German political question rather than a telecoms one. A full merger would cut the combined state holding to roughly 17%, below the 25% that carries a blocking minority under German company law.

It also needs 75% shareholder approval, and support has been draining. T-Mobile’s own executives told Deutsche Telekom in August that they no longer support it.

Minority shareholders had argued the deal undervalued the American business. T-Mobile generates around $18B in adjusted free cash flow a year and pays more than $2B in dividends to Bonn.

Deutsche Telekom has kept buying in Europe regardless. It took Macquarie’s Polish fibre and TV assets in a roughly €1B deal.

Its answer this week was management. A new chief financial officer from April 2027 and a chief technology officer arriving from Amazon Web Services in November, while T-Mobile’s next finance chief comes from Shell.

None of that touches the strategic question. Europe’s largest telecoms group is still deciding whether its most profitable asset belongs outside its own jurisdiction, in a market where regulators are being asked to tighten their grip on operators rather than loosen it.