Deutsche Telekom is considering selling its T-Mobile unit in the Netherlands and has appointed an advisor to help it through the process, it emerged this week, as semi-newcomer Tele2 revealed it is close to launching its Dutch LTE-A network.
The German incumbent could raise around €5 billion from the sale of T-Mobile Netherlands, working on a figure of seven to eight times EBITDA, Bloomberg quoted unnamed sources familiar with the matter as saying.
The newswire’s informants speculated that the asset could attract interest from U.S.-based Liberty Global, which already has extensive cable operations in the Netherlands, as well as private equity firms.
The sale process is at an early stage and could still come to nothing, they said, noting that Deutsche Telekom has hired Credit Suisse as an advisor.
Deutsche Telekom is mulling its options at a time of growing competition in the Dutch market.
Once a virtual player, Sweden’s Tele2 won 800 MHz and 2.6 GHz spectrum in the country’s LTE auction in late 2012 and began rolling out its own network, brokering a site-sharing deal with T-Mobile the following year.
It expects to launch as a mobile network operator before the end of this year.
Tele2 on Wednesday reported a 4.9% decline in group EBITDA for the three months to the end of September to 1.6 billion kronor (€170 million) as investments in its Netherlands network – as well as declines at its fixed operations – began to bite.
It also reduced i ts full-year EBITDA guidance to SEK5.6 billion-SEK5.8 billion, down from an earlier forecast of SEK5.8 billion-SEK6 billion, as a result of the Netherlands project. The telco said it expects quarterly investments in the Netherlands to amount to around SEK100 million-SEK200 million per quarter, starting in Q4 and continuing throughout 2016.
By the end of Q3 Tele2’s Dutch LTE-A network reached close to 90% outdoor population coverage. "The company is in the process of finalising the plans of the launch which will take place this year," the telco said in its Q3 report.
The Netherlands is Tele2’s second largest market after its home, Sweden. It generated 21% of its group revenues – which came in at SEK6.79 billion, up 3.1% on-year – there in the third quarter.
In addition to competing with T-Mobile Netherlands, it also faces formidable rivals in the shape of Vodafone’s local unit and incumbent operator KPN.
Liberty Global, which has unified its Dutch cable operations under the Ziggo banner, also offers mobile virtual network operator (MVNO) services, making it the obvious name in the frame to buy out Deutsche Telekom, should the sale rumours prove to be true.
Liberty Global held talks with Vodafone earlier this year about the possibility of merging assets in certain key markets, likely including the Netherlands, but the pair failed to broker a deal and halted negotiations in September.
According to Bloomberg, KPN dominates the Dutch mobile market with a 52% share, followed by Vodafone with 25.5% and T-Mobile on 18.2%.
With those figures in mind, and the growing European trend towards quad-play services, it makes perfect sense that Deutsche Telekom is considering its options.
Bloomberg suggested that it could use the funds raised from the sale to participate in next year’s spectrum auction in the U.S. and to pay down debt.
