Deutsche Telekom Under Pressure to Sell T-Mobile UK

Deutsche Telekom is reported to be coming under pressure to sell the UK arm of T-Mobile due to ongoing poor performance at the mobile network. Deutsche Telekom (DT) recently warned that it might have to write down the valuation of the company in its next financial results.

Citing people familiar with the supervisory board, the Financial Times said that the pressure was coming from the firms two largest shareholders, the German government, which owns 32% of DT and private equity group, Blackstone which owns 4.5% of the group.

These people said the issue of getting out of one of Telekom's largest markets was first aired about six months ago, but falling asset valuations soon made Berlin and Blackstone more cautious about pursuing a sale option alone.

An option being considered now is a merger or acquisition with a rival operator to gain market share. The only likely candidate which could get past the UK's regulators though is Hutchison 3G UK, which is the smallest of the UK operators. There have been persistent, if always denied rumours that Hutchison 3G UK could be put up for sale by its owner Hutchison Whampoa.

A merger or acquisition would make sense in one aspect - the two companies recently merged their respective 3G Radio Access Networks into a single firm, Mobile Broadband Network (MBNL).

According to numbers from the Mobile World analysts, a merged T-Mobile/Hutchison 3G would have ended last year with around 21.2 million customers - catapulting the merged operator to 2nd place in the UK market, behind O2.

On the web: Financial Times - Mobile World

Posted to the site on 1st May 2009