Ever since its acquisition of Sprint closed nearly a year ago, T-Mobile (NASDAQ:TMUS) has been on fire.

In fact, the stock is up a whopping 58.1% over the past year, while rivals Verizon (NYSE:VZ) and AT&T (NYSE:T) are flat and down 20.5%, respectively. That's including the dividends paid out by Verizon and AT&T, and excluding any dividends from T-Mobile, which doesn't pay a dividend at all.

TMUS 1 Year Total Returns (Daily) Chart

TMUS 1 Year Total Returns (Daily) data by YCharts

Of course, many investors at or near retirement tend to gravitate toward safe dividend stocks, and may have missed out on the big winner of the U.S. telecom sector.

What if I told you there's a way to buy exposure to T-Mobile's business, while also getting paid nearly a 4% dividend as well? Interested?

The letter 5G rise from a nighttime cityscape with other virtual icons.

Image source: Getty Images.

Buy T-Mobile's controlling owner

While T-Mobile trades publicly on U.S. exchanges, it's actually majority-owned by a combination of Deutsche Telekom (OTC:DTEGY), which owns 43.6% of the company, and Softbank (OTC:SFTB.Y), which owns another 8.9%. As part of the merger agreement, Softbank has pledged its voting rights to Deutsche Telekom, allowing it to effectively control T-Mobile. Additionally, when Softbank sold some T-Mobile shares this summer, Deutsche Telekom received call options to buy another 101 million T-Mobile shares in the future, which would guarantee majority control.

Of course, Deutsche Telekom doesn't only own T-Mobile. It also has a European telecom business, including mobile, broadband, fixed-line, and fiber, both in its home country of Germany, as well as a number of other central European countries. Deutsche Telekom gives investors exposure to T-Mobile and these other cash-flowing businesses in Europe.

Deutsche Telekom's other businesses look like bargains

Stripping out the value of T-Mobile, Deutsche Telekom's other businesses look super-cheap. These entities are also where the 4% dividend comes from. While T-Mobile's stock has skyrocketed over the past few years, you can see that Deutsche Telekom hasn't done nearly as well.

TMUS 1 Year Total Returns (Daily) Chart

TMUS 1 Year Total Returns (Daily) data by YCharts

This discrepancy in performance currently puts Deutsche Telekom's entities at a very low valuation compared with the value of T-Mobile. Deutsche Telekom's 43.6% stake in T-Mobile is currently worth about $70.5 billion, or 58 billion euros. Strip that out of Deutsche Telekom's overall market cap, and the remaining "non-T-Mobile" parts of Deutsche Telekom are worth only 13.5 billion euros.

Deutsche Telekom expects its non-U.S. businesses will earn about 3.3 billion euros in free cash flow this year, so the remaining European telecom businesses trade at only around 4.1 times free cash flow.

Should you buy Deutsche Telekom instead of T-Mobile?

Even though you are getting the remaining European businesses for a low price, there are a few considerations before purchasing Deutsche Telekom over T-Mobile.

First, while Deutsche is very cheap on an equity basis, it also has a lot of debt. T-Mobile has about $60.2 billion in net debt, or about 49.5 billion euros. Deutsche Telekom has a total net debt, excluding leases, of 92.7 billion euros, leaving a debt burden of 43.2 billion euros on the remaining European businesses. That's significant.

Second, while T-Mobile grew adjusted EBITDA 14.5% on an organic basis last quarter, the non-T-Mobile businesses at Deutsche Telekom grew EBITDA only 3.2%. That's a fairly mature low-growth business compared with T-Mobile.

Third, even if Deutsche Telekom is trading at less than the sum of its parts, those discounts can be pesky to get rid of. As seen in other examples around the world, just because a conglomerate discount exists doesn't mean it will close any time soon without some sort of catalyst. Such discounts can remain for years. Investors will likely need to hope that other investors eventually recognize Deutsche Telekom as too cheap and subsequently bid up the stock.

On the recent conference call, management postulated why the stock may be mispriced:

... what we have seen is most of our competitors are shrinking, and even this quarter again, most of them are shrinking, second quarter by minus 7% to minus 10% if I look to Telefonica, look to Orange, looking to Vodafone and the like. The only thing is Deutsche Telekom in its core market in Europe is growing. We grew by 4% in Q2. We're growing by 3.2% this quarter. So we have another development than our competition. I believe not all the investors are recognizing this. They are looking at the telco sector as a whole for the European situation, and not differentiating among the players here.

Management is certainly right that a telecom stock growing profits 3.2% probably shouldn't be trading at 4.1 times cash flow. Still, it's unclear if and how a rerating might happen in the near-term.

A better alternative to Verizon and AT&T?

While Deutsche Telekom may not ever realize full value for its assets, it did handily outperform Verizon and AT&T last year. Therefore, for dividend investors looking for an ample yield, there's a good case to be made for owning Deutsche Telekom at a 4% yield over Verizon at 4.4% or even AT&T at 7.2%. That way, you get the competitive advantages and growth of T-Mobile with a solid 4% payout along the way.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.