By Douglas Busvine
BERLIN (Reuters) - Deutsche Telekom expects to secure direct ownership of T-Mobile in the medium term, funded by a significant capital return to shareholders by its U.S. business, CEO Tim Hoettges told shareholders on Thursday.
Addressing the telecoms group's annual general meeting, Hoettges said he expected T-Mobile to return up to $60 billion to shareholders between 2023 and 2025.
With its share of the proceeds, Deutsche Telekom would be able to raise its holding in T-Mobile to more than 50% from 43% at a price below current market levels secured with options, he added.
"It's harvest time," said Hoettges.
He said that the first task will be to reduce group debt of about 120 billion euros ($141 billion), which had increased as a result of T-Mobile's takeover of smaller rival Sprint a year ago.
Hoettges reiterated Deutsche Telekom's goal of reducing its leverage ratio - debt as a multiple of core earnings - to a range of 2.25-2.75 times from 2.78 times over the medium term.
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Deutsche Telekom faced criticism from some shareholders at the AGM - being held online for the second time in as many years because of the COVID-19 pandemic - for proposing an unchanged dividend of 0.60 euros despite last year's strong results.
In his speech, Hoettges said that Deutsche Telekom would "further develop" its dividend in future years.
The Bonn-based company confirmed that it expects its adjusted core profit to rise to 37 billion euros ($43.4 billion)this year with cash flow at 8 billion euros.
Group adjusted earnings before interest, tax, appreciation and amortisation after leases (EBITDA AL) rose by 42% last year to 35 billion euros, driven by the $23 billion deal between T-Mobile and Sprint.
As part of the takeover, Deutsche Telekom secured voting rights over the 9% stake in T-Mobile stake still owned by former Sprint backer Softbank, enabling the German group to consolidate the results of its largest operating business.
($1 = 0.8520 euros)
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(Reporting by Douglas Busvine; Editing by Thomas Escritt and David Goodman)