Deutsche Telekom sounds out potential bidders for Dutch business

The German incumbent has made no secret of its plan to offload T-Mobile Netherlands, and now it appears as if that process has begun in earnest.

According to a Bloomberg report late last week, Deutsche Telekom has appointed Morgan Stanley to help it sound out potential suitors.

Unnamed sources cited by the outlet claim that private equity firms Apax Partners, Apollo Global Management, BC Partners, Providence Equity Partners, and Warburg Pincus have all shown early interest in T-Mobile Netherlands. These sources said a deal could value the company at up to €4.5 billion.

It is no surprise that financial investors are keen on T-Mobile Netherlands. The company owns and operates its own mobile infrastructure, including towers, which is a booming market at the moment. In addition to its network, T-Mobile Netherlands also ended 2020 with the largest share of the retail mobile market, according to Dutch telco watchdog, the Authority for Consumers and Markets (ACM). Stats published in April gave T-Mobile a 30-35 percent share of the market in Q4 last year, followed by incumbent KPN with 25-30 percent. VodafoneZiggo sits third with a 20-25 percent share of the market.

Now looks like a good time to cash in, and sure enough, rumours surfaced in January that DT was looking for an exit. Deutsche Telekom CEO Tim Höttges confirmed as much during the company’s capital markets day in May, telling investors that he had put T-Mobile Netherlands “in the shop window”.

It marked a return to a familiar subject for Höttges, who first floated the idea of offloading the unit in 2015. Reports at the time suggested that cableco Liberty Global might be interested. However, on that occasion, Liberty ended up merging its Dutch arm Ziggo with Vodafone Netherlands, completing the deal in late 2016. Instead of finding another suitor, Deutsche Telekom decided to stick around for a while longer, and bolstered T-Mobile Netherlands’ market share by agreeing to acquire Tele2’s Dutch business in late 2017.

Tele2 still owns 25 percent of T-Mobile Netherlands, but it would appear that the Sweden-based operator is as open to a sale as Deutsche Telekom.

In May, Tele2 chief executive Kjell Johnsen said during his company’s capital markets day that the Netherlands is not a priority for him.

“We are very happy that we have a tremendous asset in the Netherlands where we own 25 percent,” he told investors. “But we are a Nordic and Baltic operator, so it’s natural for us to focus on crystallising maximum value in the Dutch asset, and not be a long-term strategic owner in that market.”

With reportedly plenty of interest from potential buyers, and both major shareholders keen to make bank, the sale of T-Mobile Netherlands is looking more and more like a certainty.