Deutsche Telekom mulls BT stake sale af­ter Brexit vote

Kuwait Times - - BUSINESS -


Deutsche Telekom is con­sid­er­ing sell­ing its 12 per­cent stake in BT Group, two sources fa­mil­iar with the mat­ter said, paving the way for it to leave the Bri­tish tele­coms market fol­low­ing Bri­tain’s vote to quit the Euro­pean Union.

The German group is eval­u­at­ing a po­ten­tial sale of its stake, which has a market value of 4.4 bil­lion pounds ($5.47 bil­lion), and will take a fi­nal de­ci­sion once it has more clar­ity on the kind of deal Bri­tain will strike with the EU next year, the sources said. While there is no cer­tainty a deal will hap­pen, Deutsche Telekom’s de­lib­er­a­tions are one sig­nal that for­eign com­pa­nies are re­think­ing their strate­gic in­vest­ments in Bri­tain in the wake of the Brexit vote.

The fall in the value of the pound and fore­casts that economic growth will shrink as a re­sult of Bri­tain los­ing ac­cess to the Euro­pean sin­gle market have cast a shadow over the coun­try’s at­trac­tive­ness as a place for for­eign com­pa­nies to hold strate­gic in­vest­ments. Deutsche Telekom de­clined to com­ment and a spokesper­son for BT Group said the Bri­tish com­pany does not com­ment on ru­mor and spec­u­la­tion. Deutsche Telekom is re­stricted by a lock-up agree­ment to sell its stake in BT before Au­gust 2017 un­less it agrees an off-market deal with fi­nan­cial in­vestors.

The com­pany also op­er­ates an IT and con­sult­ing busi­ness in Bri­tain through its sub­sidiary T-Sys­tems, which DT once tried to merge with BT’s Global Ser­vices unit but is now ru­mored to be sell­ing.

Deutsche Telekom be­came BT’s largest share­holder when the Bri­tish tele­com group bought mo­bile player EE for GBP 12.5 bil­lion last year, in which France’s Or­ange and DT had 50 per­cent each.


An exit from Bri­tain would al­low Deutsche Telekom to con­cen­trate on its larger busi­ness in the United States, which has been touted as a pos­si­ble takeover tar­get fol­low­ing a string of deals in the US tele­coms, me­dia and tech­nol­ogy sec­tor. Free­ing up cap­i­tal from Bri­tain would al­low Deutsche Telekom the op­tion to do a deal it­self and re­move the threat of an un­in­vited takeover bid. Bri­tain rep­re­sents a rel­a­tively small part of Deutsche Telekom’s value while its US op­er­a­tion ac­counts for 42 per­cent of to­tal rev­enue, ex­ceed­ing its home market, which con­sti­tutes 32 per­cent, ac­cord­ing to Thom­son Reuters data. An­a­lysts have iden­ti­fied the com­pany’s T-Mo­bile US busi­ness as a pos­si­ble deal tar­get in the US tele­coms space fol­low­ing AT&T’s $85.4 bil­lion ac­qui­si­tion of Time Warner last week. Po­ten­tial bid­ders would in­clude Com­cast Corp , satel­lite-TV provider Dish Net­work Corp, and Mex­i­can tele­com com­pany Amer­ica Movil, they said. “If DT wants to re­main a com­pet­i­tive, in­de­pen­dent player in the US they’ll need to team-up with a cable player like Sprint “, said one of the sources. Deutsche Telekom owns 65 per­cent of the T-Mo­bile US which has a market value of $40 bil­lion. Deutsche Telekom would want to as­sess how much they need to spend on US spec­trum and how much cap­i­tal will be re­quired to take part in sec­tor con­sol­i­da­tion in the United States and in Europe before mak­ing any fi­nal call on Bri­tain, one of the sources said. — Reuters

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