BT Group PLC (LON:BT.A) may be about to report its first set of quarterly results under new CEO Philip Jansen but investors are also fretting about what German rival Deutsche Telekom AG might do with its big stake in the UK group.
The lock-up on Deutsche Telekom’s 12% holding in BT — a legacy of the £12.5bn sale of mobile phones business EE to the FTSE 100-listed firm in 2015 — ended on January 29.
READ: BT to post weaker third-quarter earnings as investors wait to hear from new boss
That means the German giant is now free for the first time in four years to either add to – or sell down – its BT stake, which had been widely seen as a potential foothold for a future takeover.
Deutsche Telekom transferred its holding in BT into its pension fund last year and said last November that it had no intention of raising its holding. Under the terms of the EE deal completed in 2015, it could have upped its BT stake to as much as 15%.
However, given the Brexit vote, UK regulatory concerns and BT’s plunging share price due to declining financial performance and an accounting scandal in Italy, such takeover talk has cooled significantly.
Deutsche Telekom’s focus on the US, where it is close to a takeover of Sprint, has also dampened any appetite the German company may have had to pursue its UK rival.
But never say never. Given the UK firm’s struggling performance, the uncertainty associated with a new boss, and even possibilities that Brexit may not even happen, the Germans could always pull off a surprise.
If not, the disposal of a 12% stake could put BT in play for someone else to take a punt on the UK telecoms and broadband world.