Telecoms analysts have questioned media reports that Deutsche Telekom may need to sell off assets, including its stake in UK mobile operator Everything Everywhere, if the AT&T/T-Mobile US deal collapses. In a report yesterday, Reuters cited a…
Telecoms analysts have questioned media reports that Deutsche Telekom may need to sell off assets, including its stake in UK mobile operator Everything Everywhere, if the AT&T/T-Mobile US deal collapses.
In a report yesterday, Reuters cited a “well-placed senior banker” claiming that there had already been some discussions regarding non-core assets, which included the Everything Everywhere JV.
It also cited investment bankers saying that the company’s immediate priority would be to protect its dividend, which would reportedly be a struggle if the AT&T/T-Mobile deal failed.
Deutsche Telekom said that it was its policy not to comment on rumours or speculation in the market.
Carlos Winzer, a SVP and telecoms specialist at Moody’s, said that “we don’t at all” expect Deutsche Telekom to sell its stake in Everything Everywhere.
“This is considered a strategic asset for DT with significant potential given the synergies to be achieved under the JV with [France Telecom],” he said.
Winzer added that Moody’s did not expect Deutsche Telekom to sell any assets at this point.
He said: “I do believe that DT’s strategy is based on exiting the US and strengthening its European footprint.”
Other analysts following the German incumbent were less dismissive.
Adrian Pehl, an analyst at equinet Bank, said: “This pure shrinking strategy does not make much sense at first glance.”
He said that, if Deutsche Telekom were to sell its stake in Everything Everywhere, the “natural buyer” would be France Telecom. But he noted that, in this scenario, Deutsche Telekom would lose cash flows and dividends from Everything Everywhere.
Another analyst, who asked not to be named, said that he did not rule out a sale of UK assets, but he did not see this in connection to the outcome in the US.
He added that Deutsche Telekom had the highest dividend coverage in the sector, so he did not see a material urgency to cut costs.
Hannes Wittig, an analyst at JP Morgan, said that Everything Everywhere is “non-core for Deutsche Telekom at this stage”, and that as a result the main question for management would be how best to monetise the asset.
