[3GScottishUser]

The company’s two main shareholders are pressing to sell the ailing UK division

T-Mobile parent Deutsche Telekom is under pressure from its two main shareholders to sell the UK business, according to reports.

According to the Financial Times, the German Government and private equity group Blackstone are concerned over the state of T-Mobile UK, which became the first UK operator to issue a profits warning last month.

Sources told the newspaper that the idea was fist aired around six months ago, but was scrapped after falling asset valuations made the shareholders more cautious about a sale alone. An alternative is thought be a merger or acquisition deal with a UK rival.

The Financial Times said one option would be to merge with its network share partner 3 – a move that has long been seen as a possible fit.

When it issued its profits warning last month, the company said UK revenue is down around 21% year-on-year for the first quarter of 2009 and citied weakness in the US, the UK and Poland, caused by economic conditions and management changes in the UK.

Former Orange Romania executive Richard Moat is set to join T-Mobile as its new UK managing director.

http://www.mobiletoday.co.uk/DT_under_pressure_to_sell_T_Mobile_UK.html

[Ben]

It's hard to imagine that Deutsche Telekom shareholders would find T-Mobile UK unattractive to the extent they'd want to get rid of it. Talk about wanting to make a quick buck!

Still, perhaps an unholy merger with Three would end up being better for everyone...

[Hands0n]

Still, perhaps an unholy merger with Three would end up being better for everyone...

That would completely depend (a) upon which of the two were the dominant partner and (b) if it meant the end of 3's Indian CS.

[3GScottishUser]

I wonder if the T-Mobile support from Manilla would be better than the 3 support form Mumbai.

Was quite shocked that T-Mobile was under such pressure. I would have thought that the fruits of the G1 and the new Flext package deals would be something the parent company would want to hold out for.

[getti]

Interesting though, who do you think would buy T-Mobile?

[solo12002]

well it would be b funny if three did. What about TESCO?

[Ben]

Could you imagine! That'd actually be pretty cool... I don't know whether Tesco have the vision to run a mobile network themselves, though, it's a pretty specialist thing for a box shifter to do.

[solo12002]

I was thinking along the lines of they want to take on the likes of CPW and others, increase their selling of mobile phones. They currently used o2 and they have Broadband as well.

By buying T-Mobile they would be able to set their own call charges etc, it would also given them access to mobile BB as well. I mean they would buy the network and retain the ppl to run it, ie the management team.

I dont think TESCO is anyones fools

[getti]

T-Mobile UK 'could attempt tie-up with Orange'
By Andrew Parker in London and Gerrit Wiesmann in,Frankfurt
Published: May 2 2009 03:00 | Last updated: May 2 2009 03:00
The UK competition authorities would be unlikely to veto a move by France Telecom to buy Deutsche Telekom's British mobile phone business, industry analysts said yesterday.

Management at Germany's leading telecommunications company is under pressure from shareholders to decide quickly whether to sell the underperforming T-Mobile UK business. Analysts said two scenarios were possible.

First, France Telecom could buy T-Mobile UK - which JPMorgan's analysts say has an enterprise value of €3.6bn (£3.2bn) - and combine it with the French telecoms company's British mobile business. Second, Deutsche Telekom could opt to keep its UK operations and merge them with 3, the British mobile business owned by Hutchison Whampoa, the Hong Kong conglomerate.

Telekom surprised investors last week by issuing a profit warning because of problems at its US and UK mobile operations.

René Obermann, Deutsche Telekom's chief executive, said the UK business had to do better, and he is to appoint new management. "We feel the UK market is competitive, and consolidation would do good for that market," he said.

Mr Obermann emphasised he was not commenting about possible deal-making, but his statement was seized upon by analysts as evidence Deutsche Telekom might sell its UK business.

Deutsche Telekom's leading shareholders - the German government and Blackstone, the private equity group - are beginning to lose patience with the underperforming UK business. Deutsche Telekom is expected to take a €1.8bn writedown on the UK asset next week. T-Mobile UK is unlikely to attract a buyer that does not already have British operations. AT&TVerizon CommunicationsThe most logical buyer would be one of its British rivals, because consolidation ought to enhance the profitability of the remaining companies.

The UK is the only important European market to have five network operators - Telefónica's O 2 , Vodafone, France Telecom's Orange, T-Mobile and 3 - and they periodically engage in price wars. Fewer operators would allow less aggressive pricing and improved profitability.

Jerry Dellis, analyst at JPMorgan, said he would not expect the competition authorities to block a move by France Telecom to buy T-Mobile UK and to combine it with Orange UK.

An Orange-T-Mobile tie-up would command a 40 per cent share of revenue paid by British mobile users. That figure includes Virgin Mobile's customers, because the company uses T-Mobile UK's network.

But Mr Dellis highlighted how the leading mobile operators in France, Italy and Spain all had market shares of more than 40 per cent. "We believe Orange has the most to gain from buying T-Mobile. It is making good progress under new management but remains exposed to weakening demand and volatile competitive trends," he said

Gervais Pellissier, France Telecom's finance director, said on Wednesday that there was no proposal by Telekom to sell T-Mobile UK and therefore nothing for the French company to consider.

[3g-g]

The Orange/ T-Mo deal can't happen... one operator isn't allowed to own two licences in the UK, when Vodafone bought Manesman (a number of years ago) who at the time owned Orange, they had to sell off Orange, hence the France Telecom purchase. If Orange bought T-Mo they'd need to sell off the licence to someone else, and who want's to start a network form scratch in the current climate? I can just see T-Mo becoming the first "service provider" network in the UK, perhaps with the brand going and just a number of MVNO services being run on it.

[getti]

You would think that but it states


Jerry Dellis, analyst at JPMorgan, said he would not expect the competition authorities to block a move by France Telecom to buy T-Mobile UK and to combine it with Orange UK.

[3GScottishUser]

Step forward BT...... now could be the perfect time for them to buy their way back into the mobile market. Buying either 3, T-Mobile, or both would give them what they need to offer package deals without having to buy services from a mobile op.

BTW the landscape has changed a lot and when Lloyds can take over another huge bank without issue then a reduction in the number of mobile network operators would be easy. Its happening already by the backdoor with network sharing arrangemnts. I predict there will only be three networks eventually but plenty of resellers to ensure there is competition.

[Ben]

BT do need a mobile arm back IMHO. There's a lot I don't like about BT, but you see France Telecom and Deutsche Telekom with their global footprints and wonder whether a stronger BT would, in fact, be better for Britain.

I'd certainly rather BT or Tesco take T-Mobile than someone like FT. A merger with Three would be acceptable, given the radio network sharing already.

[solo12002]

I agree BT would be another company that might buy a network. TESCO could go down the path and close all the T- Mobile shops and move them into TESCO stores, that would enable them to cut some costs while increasing the number of T-Mobile stores.
The main issue I have with BT is they still think they are the only provider in the UK, they still dont beat or indeed match other providers on price for line rental, calls and BB ie tiscila does the lot for £20 a month whay does BT charge, and I cant see that changing. I think BT think of them selves as harrods in respect of Internet and home phone charges!

Question has to be is why T- Mobile is mot making as much money as it has in the past, surely W & W with flext is or was a winer, whats gone so wrong other than the fact ADSA beats them on PAYG call charges and thier TV adds of dancing in train stations etc is nothing short of CRAP

[3GScottishUser]

The main issue I have with BT is they still think they are the only provider in the UK, they still dont beat or indeed match other providers on price for line rental, calls and BB ie tiscila does the lot for £20 a month whay does BT charge, and I cant see that changing. I think BT think of them selves as harrods in respect of Internet and home phone charges!

BT are still restricted by Ofcom rules and cannot compete with TalkTalk and others who provide Broadband free with line rental and call packages. Their market share has yet to be depleted to a level where Ofcom consider them less dominant.

So for once its not BT to blame for their higher than average pricing.

[getti]

From what i heard/saw today, looks like T-Mobile UK are NOT for sale.

[Hands0n]

From what i heard/saw today, looks like T-Mobile UK are NOT for sale.

Hmmmm, gotta do better than that :D

[getti]

Cant say on an open forum where i heard it, you can PM me if you like but i cant post here as im sure you appreciate

[3g-g]

Everything and anything is for sale... at the right price!

[getti]

Deutsche Telekom, Europe's largest telecoms group, yesterday said it would revamp its mobile-phone subsidiary in the UK and take a "long-term" view despite coming under pressure to sell the flagging unit.

René Obermann, Telekom chief executive, said he believed in T-Mobile UK's "chances in the medium to long term", as an existing network-sharing deal with rival 3 UK allowed it to market T-Mobile "more aggressively".

The move is a sign that Telekom would prefer to stay in the UK market after a profit warning in late April due to problems there, in the US and Poland. It said then that operating profit could slip 2-4 per cent from €19.5bn ($26.1bn) in 2008.

The comments came as Viviane Reding, European commissioner for telecoms, issued guidance that encourages national regulators to force cuts in the charges that mobile operators levy on rivals for connecting calls to their networks.

Ms Reding softened the blow slightly by saying that the cuts should not take full effect until the end of 2012, rather than her earlier proposal of 2011. Vodafone's shares closed down almost 5 per cent at 121.25p.

The Bonn-based group yesterday reported a first- quarter net loss of €1.1bn - after profit of €924m in the same period 2008 - as it booked a goodwill impairment of €1.8bn for its UK arm, one of its largest units.

The Financial Times has reported that the German government and Blackstone Group, which own 32 per cent and 5 per cent of stock, had considered selling the UK unit but that low asset prices had also spurred talk of an acquisition.

Mr Obermann yesterday said "the question of UK market consolidation is bound to land on my desk again". But he also signalled that he wanted to make another go of existing operations before selling out or buying a rival.

He said Richard Moat, the former boss of France Telecom's Orange Romania unit, would become the new managing director of T-Mobile UK and spearhead a sales drive to increase traffic on the group's network.

Problems in the UK and the two other big foreign markets saw first-quarter earnings before interest, taxes, depreciation, amortisation and special items fall 5 per cent to €4.5bn. Sales remained flat at €15bn.

This marked the first mis-step by Mr Obermann since taking over in late 2006. Apart from fixing the UK, he pledged to boost T-Mobile's network in the US and cut costs in Poland to counter exchange-rate swings.

[solo12002]

Good Im glad thats so clear now! :confused:

Somehow I dont think they won the plain english award!!

[Ben]

How are the German and French governments even allowed to own big stakes in these sorts of companies these days? :/

I think I'm glad that there's no plans for an immediate sale. Competition is, at the end of the day, better, so long as T-Mobile has some fight left.