{"id":28379,"date":"2021-09-08T07:31:53","date_gmt":"2021-09-08T06:31:53","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=28379"},"modified":"2021-09-08T07:36:40","modified_gmt":"2021-09-08T06:36:40","slug":"deutsche-telekom-boss-renews-speculation-of-uk-bt-takeover","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2021\/09\/deutsche-telekom-boss-renews-speculation-of-uk-bt-takeover.html","title":{"rendered":"Deutsche Telekom Boss Renews Speculation of UK BT Takeover"},"content":{"rendered":"

The boss of German telecoms giant Deutsche Telekom (DT), Tim Hoettges, has renewed long-running speculation over their reported desire to gobble the BT<\/a> Group by hinting that “something is going to happen<\/em>” with their 12% stake within the next 12 months, before adding that they would do a “good deal<\/em>” for the UK broadband firm.<\/p>\n

For as long as we can remember, Deutsche Telekom<\/strong> has frequently been linked with speculation over a possible bid for BT<\/a>, although potential suitors have often ended up being discouraged by various concerns over the operator’s complex regulatory position, uncertainties around the outcome of Brexit, challenges due to massive debt (\u00a318.6bn) and pension (\u00a350bn) liabilities, as well as various other issues.<\/p>\n

NOTE:<\/strong> Back when BT<\/a> and EE<\/a> merged the company’s shares were worth 441p, but today they’re 164p and analysts believe that 200p would be more reflective.<\/div>\n

However, the market and BT have gone through a number of key changes over the past year. For example, the BT Group (particularly its Openreach<\/a> division) has gained some longer-term regulatory certainty from Ofcom<\/a>, which has enabled them to dramatically expand their \u00a315bn rollout plans for Fibre-to-the-Premises<\/strong> (FTTP<\/a>) broadband technology (i.e. aiming to cover 25 million UK premises by December 2026).<\/p>\n

On top of that, the recent UK and EU trade deal has helped to make the post-Brexit future easier to predict. Lest we forget, Altice UK<\/strong> (Patrick Drahi) also made a surprise move (here<\/a>) to acquire a sizeable 12.1% equity stake in BT (worth c.\u00a32bn), which is a similar size to DT’s stake. At the time, Altice UK said that it “does not intend to make a takeover offer for BT<\/em>,” but few believe Drahi will be content to sit on his hands. Meanwhile, BT itself has been busy restructuring itself.<\/p>\n

All of this may help to explain BT’s reported move last year to update their bid defence strategy (here<\/a>), with the operator perhaps being mindful that they are now more accessible to a takeover attempt than they have been at any point in the past decade. This brings us back to what DT’s boss just told analysts.<\/p>\n

Tim Hoettges, Boss of DT, said (Proactive Investors<\/a>):<\/strong><\/p>\n

“In the next 12 months something is going to happen there around [our 12% stake in BT] because the shareholder side is changing rapidly … [but] it’s too early to make a decision. We are entertaining all options. We have a lot of optionalities now on the table in the BT business. We will do something which is a good deal.<\/p>\n

We are today in a listening mode, we are not in an acting mode.”<\/p><\/blockquote>\n

In the short term, all of this renewed speculation will give BT’s share price a nice nudge, but in the long term, any takeover attempt would still have to grapple with the operator’s significant liabilities (see above). Not to mention that there will be uncertainty over how the UK Government, which has previously signalled their desire to protect key players in the British technology sector, might respond to a bid for BT due to their position within the UK telecoms market.<\/p>\n

No doubt a lot would be demanded or expected of any potential buyer, and that in itself could act as a discouragement. Time will tell. For the time being we suspect that DT are merely testing the waters and perhaps waiting to see whether Altice UK, or others, decide to bite.<\/p>\n