Deutsche Telekom looking to exit UK market after doing U-turn on U.S. sale?

orange-ee-wide

Just a few days ago, it was revealed that Deutsche Telekom had decided not to sell its controlling stake in our favorite carrier. At least, not in the short term. With that being the case, it seems that instead, it’s planning on leaving the UK market. Over on my side of the pond, Deutsche Telekom owns half of the EE joint venture. The other half is owned by Orange SA, a French telecoms company. And both companies seem intent on selling shares in their British company.

Deutsche Telekom and Orange, the biggest phone companies in Germany and France, respectively, pooled their U.K. assets together to help generate savings in network and purchasing. Now they’re looking to at least partially cash in on that strategy. The owners called off an IPO plan for EE earlier this year following a strategic review.

Sources told Bloomberg that an initial public offering (IPO) is the most likely route, but other options also include selling the company to a financial investor or another carrier. That said, it seems unlikely that the UK regulators would ever agree to one of the other major UK carriers buying EE from Orange and DT. There’s no deadline set for when a move will be made, and neither of the two current owners is interested in buying out the other half. It’s predicted that EE will be valued at around €15 billion EU ($19 billion USD) if it comes to being sold.

Regardless of what happens, Deutsche Telekom needs to raise funds to invest in to its other Central European properties, to remain competitive on the continent. And if an exit from the U.S. isn’t going to happen, stepping away from the UK market might be the next best thing.

Source: Bloomberg

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  • BrotherCanYouSpareADime

    Cam or Panther Lady, can you loan me $19 billion (give or take a few)?

    • Cam Bunton

      Pahaha… If I had $19 billion, I can assure you, I would not spend all hours of the day blogging and making videos. ;-)

      • JB

        Not even for the love of the craft? Haha

      • vrm

        Perhaps twitter would be a better place…

    • thepanttherlady

      You take checks, right? ;)

      • BrotherCanYouSpareADime

        Don’t need your money anymore, found out via email I was related to a prince in Nigeria – my financial concerns are a thing of the past!

        • thepanttherlady

          So you’ll be moving over to Verizon then? =p

        • Bklynman

          You too? I thought I was the only one! Also I never knew there were so many people that work in Nigeria with my last name(pass on) that have left millions behind with no family!

  • sushimane

    What a role reversal orange and DT became EE and now they want to get out lol.

  • taron19119

    Hope when they sale ee they give t-mobile some money

    • maximus1901

      Uh no. They will invest in their fixed networks. And dividend. Maybe share buyback.

  • calvin200

    I can see TMobile fans using this article to hang hope on that DT still wants them.

    • maximus1901

      Uh no. DT is forced to keep TMO because att and sprint were stopped from buying it.

      • EndlessIke

        DT isn’t forced to do anything. TMUS is publicly traded. They could unwind their position via sales on the exchange if they didn’t want to keep T-Mobile.

        • maximus1901

          Wrong. Until nov 1, they can only sell stake all at once to one buyer or not at all. Part of metropcs lockup period agreement.

          After nov 1, they’re effectively forced to keep TMO because there’s no one in world who would pay what DT thinks TMO is worth.

        • Moby

          As part of their merger agreement with Metro PCS, they can not sell a partial amount of shares until November 1st as maximus1901 correctly stated.

      • vinnyjr

        Wrong, DT can sell to any 3rd party not to mention they are publicly traded company which means the sky is the limit to possabilities.

        • maximus1901

          They can sell to any third party but it must be entire stake.
          Stop being lazy and google “tmobile deutsche telecom lockup”

        • maximus1901

          Nov 1 they can do what they want with the stock.

        • maximus1901

          Additionally, DT also expanded the so-called “lock-up period,” during which it cannot publicly sell shares in the company, to 18 months after the deal closes. Importantly, however, the new offer does not change the ownership structure of the combined company, in which DT will own 74 percent.

        • maximus1901
        • calvin200

          To any third party? Being able to do something does not make it more easier to implement.

  • Clifford Haight

    The merger in the UK didn’t make sense to me in the first place. In France my preferred provider was Orange but T-Mobile when I was in the UK.

  • I don’t understand DT. It is well capitalized, with about €15 billion in liquidity. Why does it seem hellbent on selling well established subsidiaries in one country to set up another subsidiary in another country, especially when the former countries are rich ones and the latter ones, poor? It doesn’t make sense to me that in order to grow DT must shrink. But I’m glad that the saga of selling TMUS is over for now.

    • maximus1901

      It wants money to invest in Germany fixed network. Where did you get that 15bil number?

      • I got that figure from its 2013 financial statement. Still, it’s got the capital and the assets to back up raising capital. Methinks that there’s more to it and that the actual reason is something else. Maybe something as mundane as politicians putting pressure in DT to be more Germany-centric, since the German government owns about a third of it.

        • maximus1901

          Does liquidity mean cash?
          Raising capital means either more debt or diluting current shareholders by issuing more shares
          That’s why raising capital ain’t gonna happen.
          I’m skeptical that DT has €15bil in cash or other liquids. It wouldn’t be trying at all to raise funds for its fixed network.

        • k

          I don’t think its pressure by German government. I think its the fixed wire as maximus1901 has pointed out. Figure that you’re having to build out into Eastern Europe, which requires major capital investment and the poorer countries in Southern Europe.

    • maximus1901

      Um that includes €12.6 bill of credit lines AND DT is around €40b in debt as it is. So yeah.

    • It’s less about Deutsche Telekom and more about Orange. Orange is investing like crazy into Africa and Southern Europe, both of which need lots of money. Orange is the one that really wants to sell its stake in EE.

      • Cam Bunton

        Also, EE’s currently losing customers to Vodafone and O2.

        • Yes, but EE can turn that around if they fix the reason for customers leaving. Does anyone know what the primary reason for EE’s losses are?

  • kev2684

    is EE not making enough? EE is number 1 in the UK right?

  • KlausWillSeeYouNow

    EE is such a stupid name.

    • kev2684

      i thought it was cool.
      Everything Everywhere sounds good for a fiber internet provider

      • They are a fiber provider, too. EE is building a fiber network throughout the UK.

      • Cam Bunton

        I have my finer and mobile through them. They’re just entering the TV sphere too with their own set-top box.

    • Nick Gonzalez

      Sounds better than T-dish

      • gamechanger

        T- dish is the better name

      • KlausWillSeeYouNow

        I never suggested that be the combined entity’s name…

  • Mo

    It’s all about grabing as much cash as possible to shore up their major European operation. They need to sell something to raise cash for infrastructure improvement. Perhaps they should take lessons from TMO on a trim around plan. Just a thought.

  • Justin Smith

    I’m confused, if you live in the UK then why do you report so much on TmoUS and other US deals?

    • Kevin

      Because it’s a job.

    • Nick Gonzalez

      This site was started and run by a GREAT American from Florida named David Beren.
      .
      Cam (from the UK) took over earlier this year, I think it was this year, after Phonedog Inc decided to go gangsta and shove my boy David out. But thank Jebus they didn’t install their other writers here. You don’t want to read some of the hogwash they write.

      • taron19119

        Your wrong David was not forced out David beren. David got a job working with t-mobile and is running there social media team

        • thepanttherlady

          Actually, you’re the one who is wrong. You are correct, however, that David is now working for T-Mobile but that wasn’t the reason he left this blog and happened much later.

        • Bklynman

          David got push out the door,by phonemutt,all his readers that was on here when it happen was shock,not too happy about it. It happen last Oct,The new daythe music die!

        • Nick Gonzalez

          Ahhh hey! I love to be corrected but I think you’re incorrect yourself my friend!
          .
          And also David had a short stint with 9 to 5 Google before he went to T-Mobile, and I believe John Legier himself brought him on. But I what do I know? I only follow DBeezy on Twitter & Google+.

      • Cam Bunton

        Actually, I’ve been here almost 12 months already (I know, I couldn’t believe it either when I realized). I was on vacation in Germany around the end of October/beginning of November last year when he told me was leaving.

  • What’s probably happening here is that Orange (who really needs the money and isn’t as well capitalized as Deutsche Telekom) wants to sell its stake. Given that EE is #1 in the UK and that it’s doing well in general, what we are likely to see is that DT will buy a portion of Orange’s stake in EE and float the rest on the London Stock Exchange. That way, EE can follow the model that T-Mobile US has followed in being self-funding while still contributing to the Deutsche Telekom Group.

    That being said, it would be interesting to see if EE would revert to being T-Mobile UK if Orange does indeed exit from the joint venture and DT floats a portion of Orange’s stake.