Deutsche Telekom is working on an overhaul of its Eastern European activities, the Wall Street Journal reported, citing people familiar with the company's thinking. Its management and supervisory boards will meet in Poland in the week starting 02 September to discuss strategy, one of the people told the Journal. It is unclear whether the meeting will result in agreeing on specific measures.
The strategy review is aimed at streamlining the footprint of the company's Eastern European units and could even result in selling assets such as its 61 percent stake in T-Mobile Czech Republic, among other things, the people have said. Deutsche Telekom valued that stake at EUR 1.75 billion at the end of 2012. One of the sources said that Chief Financial Officer Timotheus Hottges, who will succeed Rene Obermann as CEO, might be inclined to hold on to the unit, in order to maintain an international presence.
The sources said one cornerstone of the review is the question of whether Deutsche Telekom should exit Eastern European markets in which it has mobile-only activities, or buy fixed-line and broadband assets in them to strengthen its position. A spokesman for Deutsche Telekom declined to comment.
Several people familiar with the matter said Deutsche Telekom is considering buying a fixed line operator and cited GTS Central Europe and Netia as companies with which the German company has held talks. One said that while Deutsche Telekom's interest in GTS Europe has waned recently, it could rekindle its interest in Netia. Financial investors Third Avenue Management and Sisu Capital have hired Morgan Stanley to sound out interest from potential buyers of Netia, another person said. Both investors hold a combined stake of around 25 percent.
GTS Europe could be valued above EUR 500 million, people familiar with matter have said. It operates in Poland, the Czech Republic, Romania and Hungary, while Netia is confined to Poland. One source said that a decision to buy either Netia or GTS Europe could depend on the outcome of strategy review for Eastern Europe. Netia and GTS Central Europe did not immediately respond to a request from the Journal for comment.
