Deutsche Telekom AG (DT) is considering selling its 12 percent stake in BT Group PLC, two sources familiar with the matter said, paving the way for it to leave the British telecoms market following Britain’s vote to quit the EU.
The German group is evaluating a potential sale of its stake, which has a market value of ￡4.4 billion (US$5.51 billion), and is to make a final decision once it has more clarity on the kind of deal Britain is to strike with the EU next year, the sources said.
While there is no certainty a deal would happen, Deutsche Telekom’s deliberations are one signal that foreign companies are rethinking their strategic investments in Britain in the wake of the “Brexit” vote.
Deutsche Telekom declined to comment and a spokesperson for BT Group said that the British company does not comment on rumor and speculation.
Deutsche Telekom is restricted by a lock-up agreement to sell its stake in BT before August next year unless it agrees an off-market deal with financial investors.
The company also operates an IT and consulting business in Britain through its subsidiary T-Systems, which Deutsche Telekom once tried to merge with BT’s Global Services unit but is now rumored to be selling.
An exit from Britain would allow Deutsche Telekom to concentrate on its larger business in the US, which has been touted as a possible takeover target following a string of deals in the US telecoms, media and technology sector.
Freeing up capital from Britain would allow Deutsche Telekom to do a deal itself and remove the threat of an uninvited takeover bid.
Britain represents a relatively small part of Deutsche Telekom’s value while its US operation accounts for 42 percent of total revenue, exceeding its home market, which constitutes 32 percent, according to Thomson Reuters data.
Analysts have identified the company’s T-Mobile US business as a possible deal target in the US telecoms space following AT&T Inc’s US$85.4 billion acquisition of Time Warner Inc last week.
Potential bidders would include Comcast Corp, satellite-TV provider Dish Network Corp, and Mexican telecom company America Movil, the analysts said.
“If DT wants to remain a competitive, independent player in the US they’ll need to team-up with a cable player like Sprint,” one of the sources said.
Deutsche Telekom owns 65 percent of T-Mobile US which has a market value of US$40 billion.
Deutsche Telekom would want to assess how much they need to spend on US spectrum and how much capital would be required to take part in sector consolidation in the US and in Europe before making any final call on Britain, one of the sources said.
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