Deutsche Telekom is facing calls from key shareholders to consider selling its ailing UK mobile operation, T-Mobile UK, reports the Financial Times. According to the report, the German telecoms giant is under pressure from the German government (a 32 percent shareholder) and private-equity firm Blackstone (4.5 percent) to find a solution at T-Mobile UK, which has been struggling as the UK’s fourth-largest mobile operator in a fiercely competitive market. One alternative to a sale reportedly being considered is a merger with Hutchison Whampoa’s 3 UK, which is seen as an expensive solution but one that would increase the operator’s declining market share. In contrast to the UK situation, the shareholders are said to be supportive of Deutsche Telekom’s US arm, T-Mobile USA, which is also struggling against larger competitors.

Both the UK and US operations were responsible for Deutsche Telekom issuing a surprise profits warning last week, which saw it lower its EBITDA guidance for the first quarter. The warning prompted speculation about the future of both businesses. T-Mobile UK recorded a significant drop in revenues of around 21 percent (due partly to the fall in the value of the UK pound). Deutsche Telekom CEO Rene Obermann is currently in the process of installing a new management team at the unit in a bid to revive the business.