DT offloads its Dutch operation to private equity duo in €5.1B deal

• Deutsche Telekom has agreed to sell its Dutch operation in a deal valued at €5.1 billion
• T-Mobile Netherlands is being acquired by Apax and Warburg Pincus
• Recent speculation had linked Reliance to a bid for the Dutch operator

Deutsche Telekom and Tele2 have agreed to sell T-Mobile Netherlands in a deal valued at €5.1 billion, the operators announced Tuesday morning: But the buyer isn’t India’s Reliance Industries Ltd. (RIL), as had been speculated, but the private equity duo of Apax Partners and Warburg Pincus.

DT, which holds a 75% stake in T-Mobile Netherlands (with Tele2 owning the other 25%), had announced earlier this year that its Dutch operation was surplus to requirements and proceeded to sell its tower assets in the Netherlands in advance of any sale of the T-Mobile unit, which has about 6.9 million mobile, 700,000 broadband customers and annualized revenues of just over €2 billion. It is the largest mobile operator in the country and already offers 5G services extensively.

The German giant expects to receive €3.8 billion in net cash from the sale, of which €2.4 billion will be used to increase its stake in T-Mobile US as part of DT’s new arrangement with SoftBank. 

The move also suits Tele2, which has been revamping its international portfolio. “We are very happy with the development of our strategic ownership in T-Mobile Netherlands during the last few years,” stated President and CEO Kjell Johnsen in this announcement. “I am proud of the achievements of our colleagues in the Netherlands and I am sure they can come even further together with Apax and Warburg Pincus. This successful sale will conclude Tele2’s international consolidation and we will now continue our strategy to focus on our core operations in Sweden and the Baltics,” added Johnsen. 

Tele2 says the nature of the deal values its stake at €860 million and that it plans to pay a special dividend to shareholders of SEK11 ($1.28) once the sale is completed.   

For Apax and Warburg Pincus, the move is the latest in a series of telecom industry investments: Apax, for example, has during the past two decades invested in the likes of Bezeq, Orange Switzerland (now known as Salt Mobile) and TDC, while Warburg Pincus was an investor in Ziggo in the Netherlands until 2013 and is currently an investor in UK broadband network operator Community Fibre. In addition, Apax and Warburg Pincus are currently stakeholders in satellite operator Inmarsat, which earlier this year appointed former Nokia boss Rajeev Suri as its CEO.  

For Reliance Industries, which had reportedly been girding its loins for a €5 billion-plus offer for T-Mobile Netherlands to provide its massively-successful Reliance Jio operation in India with an international foothold, the news will come as a disappointment. Might it now look elsewhere for a way to expand into Europe?

- Ray Le Maistre, Editorial Director, TelecomTV