Report: Deutsche Telekom mulls sale of UK, Dutch subsidiaries

Deutsche Telekom may sell its UK and Dutch mobile subsidiaries as early as next year in an effort to raise cash, according to a report in the the Financial Times Deutschland. The report, which cited unnamed sources familiar with the situation, said that proceeds from these sales would be reinvested in the business.

However, any investment flexibility provided by these new funds would be constricted by the commitment Deutsche Telekom has made to invest around €1 billion in T-Mobile USA's network this year and in 2013 to pay for an upgrade to LTE, with investments totaling €3.05 billion over time. Additionally, Deustche Telekom has committed to boosting its fibre network in Germany and has promised to pay a dividend of €0.70 per share.

Deutsche Telekom declined to comment on the report, which said the performance of the company's European units will be the subject of an annual strategic management meeting this summer.

Deutsche Telekom's Dutch subsidiary faces an uphill task, given that it has a similar market share as Vodafone but much lower margins, according to the Financial Times Deutschland. The company will also need to consider what approach it will adopt when new spectrum is auctioned this autumn by the Dutch authorities, as it faces an increasing threat to text messaging revenues from IP-based messaging services.

The sale of its Dutch subsidiary could, according to bankers, raise between €2 billion and €3 billion for the German telco.

Deutsche Telekom's investment in the UK via its Everything Everywhere joint venture with France Telecom Orange is also complicated by the need for the UK operator to push forward with aggressive cost savings whilst significantly improving its profits.

For more:
- see this Financial Times Deutschland (translated via Google Translate)
- see this Reuters article
- see this Dow Jones Newswires article

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