Will DT buy a bigger stake in BT?

Deutsche Telekom has been limited to holding a 15% stake in BT for three years, but this ends on 29 January. 

According to reports, as a defensive measure, BT is consulting takeover advisors Robey Warshaw in the City of London, and bankers from Goldman Sachs, but has declined to comment. Its shares are at a five-year low.

Deutsche Telekom became BTโ€™s biggest shareholder after BT agreed to buy EE from it and Franceโ€™s Orange in 2015 for ยฃ12.5 billion. BT financed the deal by issuing new shares to Deutsche Telekom and Orange, resulting in them gaining 12% and 4% holdings respectively.

A condition of the acquisition was that Deutsche Telekom would not increase its share within three years of the deal being concluded at the end of January 2016. There has been endless speculation that the German operator will seek to increase its stake after that date.

Reasons to resist

In November Deutsche Telekomโ€™s CEO, Timotheus Hรถttges, who also sits on BTโ€™s board, observed that BT was โ€œpart of our pension stock here. We are not in a phase of upgrading or improving our stake.โ€

Indeed, BTโ€™s pension fund has a deficit of ยฃ11.3 billion (โ‚ฌ12.8 billion) and in December lost a court appeal to change how it calculates pension rises for up to 80,000 members. There are also systemic problems in its Global Services division and the uncertainties of Brexit.

Hรถttges was also quoted saying, โ€œBefore taking over BT, let me tell you that we would first go for Orange, then KPN, then TeliaSonera and then BTโ€.
Philip Jansen, BTโ€™s new CEO, takes up the role on 1 February.