FRANKFURT/LONDON (Reuters) -- Deutsche Telekom is mulling options for its undersized T-Mobile USA unit including an initial public offering (IPO) or spinoff, sources familiar with the company's thinking said on Friday.

The sources said Deutsche Telekom had held initial talks with banks but no formal process was underway and an IPO was only one of several options, after the Wall Street Journal reported that Deutsche Telekom was preparing an IPO or spinoff.
Other possibilities include a sale, an organic expansion or a partnership with another operator.
Representatives of Deutsche Telekom and T-Mobile USA declined to comment.
Deutsche Telekom has been searching for the right strategy for T-Mobile USA, a distant fourth in the U.S. mobile market, once prized as its growth engine, but which has struggled to build scale and has been losing customers.
Shares in the German telecoms provider rose 0.65 percent to 9.3 euros by 06:03 A.M. EST, while the European telecoms index. SXKP was down 1.05 percent.