Deutsche Telekom set for €3B write-down of BT stake - Mobile World Live

Deutsche Telekom set for €3B write-down of BT stake

07 FEB 2017

Deutsche Telekom (DT) will book a €3 billion write-down on its 12 per cent stake in BT following a profit warning by the UK operator in late January, financial analysts Macquarie Research predicted.

In its latest European telecoms market report, Macquarie said it expected the German company to take a “significant” hit on its holding – which it acquired in payment for its half of EE – and suggested Deutsche Telekom would have had an additional €3 billion to invest in its German network if it followed former EE partner Orange’s lead by taking a mixture of cash and shares when selling the UK business.

The analyst house also raised concerns a BT accounting scandal in Italy means the UK operator is unlikely to hit its targets for the year and would be less likely to put network investment on hold in a bid to inflate free cash flow.

DT currently holds a 12 per cent stake in BT, which it is locked-in to retain until June. At the time of the EE deal, DT’s shareholding was valued at €7.4 billion, but following BT’s profit warning and the subsequent plummeting of its share price, the value reduced to around €4.2 billion.

Orange took a four per cent stake and €3.4 billion in cash for its half of EE, with a shorter lock-in period which expired in late January.

Although its stake is much smaller, Macquarie warned Orange may also have to make adjustments in its next financial statement.

The EE acqusition is beginning to pay off for BT, which recently reported the mobile business turned to growth for the first time in its history in the final three months of 2016.

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Chris Donkin

Chris joined the Mobile World Live team in November 2016 having previously worked at a number of UK media outlets including Trinity Mirror, The Press Association and UK telecoms publication Mobile News. After spending 10 years in journalism, he moved...

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