Deutsche Telekom has put T-Mobile Netherlands up for sale, Bloomberg reports. The mobile operator could raise around EUR 5 billion. A sale is not unexpected, and Liberty Global is the most obvious buyer. While the number of operators would not change in that case, it would still have far-reaching consequences for the Dutch market.
Deutsche Telekom believes, the same as most operators, in fixed-mobile convergence and the quad-play, or put in better and more general terms: the ability of an operator to offer a complete portfolio of services, fixed and mobile. All the mobile-only operators owned by DT are potentially up for sale - such as T-Mobile UK, which through a complex exit strategy will be exchanged for a 12 percent stake in BT. T-Mobile US is another candidate, for which Deutsche Telekom is trying to maximize the potential proceeds.
T-Mobile NL is labeled by its parent company as a 'smart attacker'. Its management largely has a free hand to maximise the value of the company. This includes for example launching fixed services on the business market, and working with Tele2, both in 3G (MVNO) and in 4G (network sharing). In other words, a bit of 'window dressing' in order to achieve the highest possible sale price.
Altice and Hutchison
Other candidates for buying T-Mobile are easy to imagine. Altice, for example, which after swallowing up T-Mobile would undoubtedly try to acquire Ziggo. Any number of private equity companies could also be interested in taking part in the latest round of consolidation.
Another category of buyer is a mobile-only operator, those less interested in convergence. Tele2 is such a player, but will face difficulties securing regulatory approval given the recent negative attitude towards markets reducing from four to three mobile operators. A merger of T-Mobile and Tele2 would also add little, as it would still be in third (last) place.
Hutchison is another mobile-only player, which started in the 2G world with the Orange brand and gained scale in the 3G era under the name 3. It could add to its geographic footprint by entering the Dutch market.
Liberty Global
The most significant possible bidder though is Liberty Global, which could merge T-Mobile with Ziggo, the biggest cable operator in the country. This appears more likely since Liberty Global's talks on a merger with Vodafone failed. A deal with T-Mobile would offer synergies, so a relatively high bid would be required.
At first glance, such a deal appears to have limited impact - only a change of ownership and there would still be four network operators. At the same time, a relatively unique situation would be created, where alongside the PTT, a second, national, fully integrated operator is created, comparable with Telenet/Base (also Liberty Global) in Belgium. On the positive side, this creates a strong competitor for the incumbent, while only the negative side, any third operators will find it very difficult to stay relevant. If such a deal is approved, it must come with strict guarantees for access to KPN's network, and possibly also opening up Ziggo's network. The biggest competitors, Vodafone and Tele2, will certainly fight for this. They can even take it a step further and call for structural separation of KPN, although both currently appear satisfied with KPN as a wholesale provider.
The mentioned price of EUR 5 billion for T-Mobile, equal to 7-8x EBITDA, appears on the high side. Mobistar is currently trading at around 6x EBITDA. Nevertheless, Liberty was prepared in Belgium to dig deep in its pockets, so it appears all the more likely a merger of T-Mobile and Ziggo may finally happen.
