Deutsche Telekom is reportedly keen to make an ‘asset swap’ deal as part of its rumoured divestiture of its UK unit, T-Mobile UK, reports the Financial Times. According to sources close to the German telecoms giant, swapping T-Mobile UK for an asset in another country is the firm’s “preferred option” to either selling the business or merging it with a UK rival operator. Rival assets that are being looked at are thought to include Vodafone Turkey, the second-biggest mobile operator in the country, which is considered an ideal target as it would complement Greece’s OTE, which Deutsche Telekom acquired last year. “But there are also other assets in central and eastern European countries that could help [Deutsche Telekom] shore up its position in markets in which it is already active,” said a source. However, the sources warned that the unwillingness of a would-be bidder to part with another asset and the complexity of dealing with regulators in two countries could make this type of deal difficult to make.

The report reiterated Deutsche Telekom’s apparent determination to get a fair price for T-Mobile UK. “EUR3 billion would be the absolute minimum value for an outright sale,” one of the people with knowledge of Deutsche Telekom said, noting that this was equivalent to six times T-Mobile UK’s EBITDA. Speculation over a possible sale of the UK unit has generated a media frenzy this week. The Financial Times on Monday said that Vodafone was preparing a bid, while subsequent reports have suggested both Telefonica (owner of O2 UK) and France Telecom (owner of Orange UK) are planning rival bids to either buy or merge their UK businesses with T-Mobile UK. Any deal done with one of the UK’s three largest mobile operators would create a market-leader with around a 40 percent (or greater) market share, though it is thought that regulators may look favourably on a deal that could ease pricing and margin pressures in the fiercely competitive UK market.