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WSJ: Deutsche Telekom Mulling Eastern European Operations Restructuring

8/29/2013 11:54 PM ET

German telecommunications giant Deutsche Telekom AG (DTEGY) is mulling the restructuring of its Eastern European operations in a bid to realign its footprint in the region, according to a Wall Street Journal report on Thursday. The move could even lead to the sale of non-core assets such as the company's 61 percent stake in T-Mobile Czech Republic.

However, CFO and deputy CEO Timotheus Höttges, who will take over as the new CEO on January 2014, may not be interested in selling the stake in order to maintain an international presence.

CEO René Obermann had announced in December 2012 his resignation with effect from December 31, 2013. The company then officially named Höttges to succeed Obermann, effective from January 1, 2014. Höttges was also named deputy CEO, effective January 2013.

Obermann is leaving Deutsche Telekom after 16 years, of which he spent seven at the helm of the company and 11 years as a member of the board of management.

Deutsche Telekom's management and supervisory boards is reportedly slated to meet in Poland next week to discuss and finalize a strategy. Among options, the company could buy a fixed-line operator to strengthen its position, or end up exiting Eastern European operations.

According to the WSJ in late May, the company was in talks on two deals in Eastern Europe to consolidate its position in the region.

The company was said to be in discussions to acquire Warsaw-based broadband optical and IP network provider GTS Central Europe for about 600 million euros or $775.9 million. GTS is also a voice and data communications service.

Deutsche Telekom could also come under pressure to buy the outstanding 40 percent stake of its T-Mobile Czech Republic unit. This holding was recently put up for sale by private-equity firm Mid Europa Partners.

However, T-Mobile Czech Republic, with about 5.5 million subscribers, is believed to be content with its 60.8 percent controlling stake, valued at 1.75 billion euros or $2.31 billion at the end of 2012. It is the largest mobile telecommunication provider in the country.

Bonn, Germany-based Deutsche Telekom is said to be rethinking its strategy in the Czech Republic as competition in the region is expected to intensify due to the anticipated entry of a fourth operator in the region.

On Frankfurt's Xetra, Deutsche Telekom shares closed Thursday's regular trading at 9.69 euros, up 0.13 euros or 1.33% on a volume of 10.84 million shares.

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by RTT Staff Writer

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