Deutsche Telekom will keep its Dutch business, halting a plan to sell the unit as bids fell short of the asking price and leaving the German phone carrier facing stiffer rivalry as two competitors combine in the country.
“We’re not planning to sell off the asset right now,” Deutsche Telekom chief executive officer Tim Hoettges said in a Bloomberg TV interview at the Mobile World Congress in Barcelona yesterday.
“We have the opportunity to consider other deals in the Netherlands.”
Private-equity firms Warburg Pincus and Apollo Global Management were the final bidders for the unit, people familiar with the matter said. Their bids were from €2.5bn ($2.8bn) to €2.7bn, said one of the people, who asked not to be identified because the sale process wasn’t public. Deutsche Telekom sought more than €3bn, the person said.
A representative for Warburg Pincus declined to comment. Apollo representatives didn’t immediately reply to an e-mail seeking comment.
A sale would have let T-Mobile exit a country where it’s fighting former monopoly and market leader Royal KPN as well as smaller Tele2. To add to competitive pressures, wireless giant Vodafone Group Plc and cable-TV provider Liberty Global agreed last week to combine their Dutch operations into a single joint venture. Deutsche Telekom lost about 1mn mobile subscribers in the Netherlands from 2011 to 2014.
“Deutsche Telekom will have to compete against three converged operators in the Netherlands,” said Erhan Gurses, an analyst at Bloomberg Intelligence. “The German carrier may follow the rest and supplement its mobile operations with a wholesale agreement in broadband — or it could follow the T-mobile US example and be a mobile maverick.” Shares of Deutsche Telekom rose 2.3% to €15.59 at 11:11am in Frankfurt.
The carrier was considering the sale of its Dutch unit in a move that could help the company raise funds to reduce debt and acquire wireless frequencies in the US, people familiar with the matter said in October.
Deutsche Telekom has said it prefers a combination of mobile and fixed services. Still, in the US its T-Mobile US unit has had success with a focus on wireless only, gaining more than a million subscribers for six straight quarters with promotions like free video streaming.
“We have a great network in the Netherlands,” Hoettges told Bloomberg TV. “We could offer something like we have offered in the US, being quite aggressive on that one.”
Deutsche Telekom entered the Dutch mobile-phone market in 2000, acquiring a stake in a venture with Belgacom and Tele Danmark. The business was renamed T-Mobile Netherlands in 2003 after the German carrier bought the remainder.