He was speaking the day after Deutsche Telekom took effective control of the third biggest operator in the US, with the US$26.5 billion merger of T-Mobile US with Sprint.
Höttges told Bloomberg “Europe is too fragmented. Wherever I see a deal or an opportunity for European market consolidation that’s convincing, then I would always look at that with the partners.”
An important factor in the US merger is that Deutsche Telekom did not have to spend any money to acquire Sprint and unite it with T-Mobile US. It was a straight merger, but one in which SoftBank, the Japanese company that was the biggest shareholder in Sprint, gave Deutsche Telekom control of its shares.
“Our goal is to become the number one in the US market,” Höttges said in the interview.
But the nature of the US deal means cash-rich Deutsche Telekom still has funds for new acquisitions.
Deutsche Telekom has operators in a large number of countries in the highly fragmented European market, including 100% of T-Mobile businesses in Austria, the Czech Republic, the Netherlands, Poland and Slovakia.
In addition Deutsche Telekom owns 51% of Hrvatski Telekom in Croatia, 45% of OTE in Greece, 49.3% of Magyar Telekom in Hungary and 54% of Telekom Romania, and operators in Montenegro and North Macedonia via them.
All that gives the German incumbent a powerful position from which to launch takeover bids – not necessarily in those countries, but potentially in others.
There have been occasional rumours of a merger with Orange, though that would challenge the French company’s own position in some European markets, and likely be blocked by the European Commission.
However, Deutsche Telekom has been the largest shareholder in BT since 2016, when the UK bought EE from it and Orange. Höttges is a non-executive director of BT.
Since then BT’s shares have plummeted in value from £4.52 in May 2016 to £1.12 today. In euro terms the downward path has been even worse, from €5.92 four years ago to €1.27 now. BT’s market cap today is £11.14 billion, the equivalent of €12.65 billion. At today’s price, Deutsche Telekom could buy the shares in BT it doesn’t own for £10.9 billion.
Höttges did not give a shopping list in his Bloomberg interview. “I will work with verve on changing the regulatory and antitrust-law framework” in Europe to help bring about the consolidation the region needs, he told the agency.
