Deutsche Telekom is considering exiting another mobile-only market, hiring a bank to explore the sale of T-Mobile Netherlands, which could draw bids worth 7x to 8x EBITDA.
Deutsche Telekom (ETR:DTE) is examining a possible sale of T-Mobile Netherlands, mandating Credit Suisse to advise on the process, according to newswire reports.
Its agreed £12.5bn (US$19bn) sale of its 50% stake in EE to BT is equivalent to 7.8x EBITDA, which if applied to its Dutch subsidiary’s 2014 EBITDA of €630m (US$715m) would net Deutsche Telekom €4.9bn (US$5.6bn).
Deutsche Telekom, like many European telcos, is looking to exit mobile-only markets in order to focus on the longer term growth offered by convergence.
A sale would allow the Bonn-based group to reduce its debt pile and bolster its spending in the upcoming US spectrum auction, people familiar with the matter told Bloomberg.
In addition to a straight sale, Deutsche Telekom could also consider a partnership, merging T-Mobile Netherlands with another operator, or swapping the unit for a minority stake in another company, reported Reuters.
The German group followed this model with EE, and assuming that deal is approved will become the British incumbent’s largest individual shareholder with 12% – exposing it to potential growth from convergence.
Deutsche Telekom declined to comment on the reports while Credit Suisse did not reply to a request for comment before the press deadline.
Liberty Global in the frame
Liberty Global, previously been linked to interest in T-Mobile Netherlands, owns the country’s largest cableco, Ziggo, but lacks a significant mobile presence. Ziggo’s MVNO has 179,000 customers, as compared to 4.2 million video subscribers and 3.1 million broadband subscribers.
The pan-European cableco, previously content with its MVNO model, earlier this year agreed to buy its first network – Belgium’s Base – a transaction now under review by the European Commission. Liberty Global has also been mentioned as a potential suitor for up-for-sale Polish operator P4.
Berenberg analysts recently commented that Liberty Global is the most realistic buyer for the Netherlands, given the fairly short list of likely bidders. The asset could become less attractive thanks to Tele2’s plans to launch nationwide 4G at aggressively low prices. With a new player in the market, Liberty Global would have a second strong wholesale option, they said.
Liberty Global will also have looked at Vodafone’s Dutch mobile operations, during its talks over the summer with the UK giant over potential European asset swaps.
Discussions ended in late September but talks could be revisited down the line.
