Deutsche Telekom could exit UK and Holland in 2013
German giant said to be reviewing its options after the collapse of US unit sale, but giving the two divisions time to improve results
Published: 17 April, 2012
Deutsche Telekom is considering exiting its ventures in the UK and The Netherlands next year, according to sources who spoke to Financial Times Deutschland. The reports indicate that the German giant has reviewed its presence in these two markets before, but wanted to give local management time to improve the units' performance to enhance a future sale price. The issue is likely to be reviewed again at the firm's annual strategic management meeting this summer.
In the UK, DT owns 50% of the largest cellco, Everything Everywhere, a joint venture with France Telecom which owns the T-Mobile and Orange brands. It also operates the T-Mobile network in The Netherlands.
The German operator has been re-examining its geographical strategies since the planned sale of its US arm to AT&T failed last year. It is now unlikely to achieve its aim of a quick exit from the US, which was to have removed a significant center of spending as well as funding expansion in higher growth markets, particularly in central and eastern Europe.
Now DT is looking to preserve its dividend and reinvest in the US in order to move the T-Mobile unit there towards LTE and boost its flagging market share and profits. In February, it said it would increase investment in T-Mobile USA's networks by $4.1bn over the next two years. Some of that will be financed by the break-up fee, in cash and spectrum, which it gained from AT&T.
Changes of ownership at Everything Everywhere have reportedly been under discussion almost since the joint venture was formed in 2010. France Telecom, which like other large carriers is backing away from units in which it does not have a controlling stake, might want to buy out its partner, or a third party (either an operator or, perhaps more probably, a private equity group) could get involved.