DT to sell T-Mobile UK?

5 May 2009

The Financial Times has reported that German telecoms company Deutsche Telekom (DT) is under pressure from its two main shareholders, the German government and private equity group Blackstone, to decide whether to sell its struggling mobile operations in the UK. According to the report, people familiar with the supervisory board said that DT’s controlling investors are worried about the state of T-Mobile UK, which according to TeleGeography’s GlobalComms database is the fourth largest player by subscribers in a competitive market. The report added that a possible alternative to a sale could be a merger or acquisition deal with a UK rival to gain market share.

The announcement follows DT’s worrying Q1 2009 preliminary results, which forced the company to cut its 2009 full-year EBITDA guidance. The firm now expects the result to be between 2% and 4% lower than the EUR19.5 billion (USD25.9 billion) recorded in 2008. Outside of its domestic market, which performed better than expected, DT’s international results were impacted by the economic slowdown, the more intense competitive environment, particularly in the US and the UK, and fluctuations in local currency exchange rates. The Financial Times reported that in contrast to their reactions towards DT’s UK operations, both shareholders in the company firmly stood behind its ambition to stay in the highly competitive US market.

United Kingdom, Deutsche Telekom (DT), T-Mobile UK