Europe’s largest fixed-line carrier Deutsche Telekom AG has reportedly been approached by a Russian conglomerate over a potential asset swap.
According to the Financial Times Deutschland, which quoted people familiar with the issue, the Russian conglomerate Sistema has approached the Bonn, Germany-based carrier with an offer to give up control of its telecoms unit, which includes Russia’s largest mobile operator, OJSC Mobile TeleSystems, MTS, in exchange for a significant stake in DT.
The newspaper said that the offer suggested that Sistema’s telecom unit would be full integrated into DT, in return for a 10% to 20% stake in the German carrier. At the moment, DT is currently 32% owned by the German government.
The approach to Deutsche Telekom was among the issues raised during the visit to Germany of Russian president Vladimir Putin three weeks ago. The newspaper reported that one member of Deutsche Telekom’s supervisory board had confirmed that he had dealt with the issue.
Both Deutsche Telekom and Sistema Telecom are refusing to comment.
Sistema is a conglomerate with property, telecoms and financial services units. It raised $1.3bn on the London Stock Exchange in 2005. MTS meanwhile is the largest mobile phone operator in Russia and the CIS, providing a GSM-based mobile service to over 58.2 million customers. It has a license footprint area that covers a population of 225.8 million in 87 out of 89 regions in Russia, as well as the entire territories of Ukraine, Belarus, and Uzbekistan.
In 2003 Deutsche Telekom actually owned a 40% stake in MTS, but it spent the next two years gradually reducing its holding, raising 3bn euros ($3.68bn) in the process to help pay off its huge debt burden.