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According to anonymous sources, the company intends to begin discussions with interested parties in February 2022, with a deal expected by the end of the year

T-Systems, the IT unit for Deutsche Telekom, has become something of a black sheep for the company in the past 18 months, finding itself underperforming compared to Telekom’s healthy telecoms business. 

Spending on orders had declined by around 25% during the coronavirus pandemic, with Telekom themselves explaining this as a reduction in spending from the automotive and airline sectors.

In Telekom’s most recent financial report, published earlier this month, the company said that T-Systems was in fact recovering, with the company swinging back into organic revenue growth for the first time since 2020, and revenues growing by 1.7% year-on-year.

According to the report, one of the most promising areas of T-Systems has been in the public cloud space, something which should come as no surprise given the partnerships the unit has been making recently. Just three weeks ago, it was announced that T-Systems and Google Cloud were collaborating to build a “large spectrum of next-generation sovereign cloud solutions and infrastructure”, focussing on enterprises and the public sector throughout Germany. As part of the deal, the two companies plan to launch a co-innovation centre in Munich. 

Now, however, it seems that the unit may not be bouncing back quick enough for Telekom’s liking with anonymous sources reporting that the German operator may in fact be looking to sell the struggling unit.

Sources suggest that discussions with interested parties could begin as early as February next year, with a deal expected to be completed in September.

On the other hand, a sale is not the only solution to the T-Systems conundrum. Alternative sources have been reporting that Telekom could instead spin-off T-Systems. In this arrangement, the German government, Deutsche Telekom, and new potential investors would split ownership of the unit three ways, each taking a third.   

Regardless of which route Deutsche Telekom ultimately takes, it seems clear that T-System’s future with the company in 2022 will be tenuous to say the least.

 

Want to hear all the latest news about the German telecoms market from the operators themselves? Join us in Mainz next month for this year’s live Connected Germany conference 

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