Government moves to lower Deutsche Telekom stake

Germany's state bank announced on Tuesday a new effort at further privatizing national phone company Deutsche Telekom with a €3-billion ($4.6-billion) convertible bond offering.

Government moves to lower Deutsche Telekom stake
Maintenance men at work in Dortmund this year. Photo: DPA

The bonds, convertible into Deutsche Telekom shares in five years’ time, will cut by around a third state development bank KfW’s current 16.9 percent stake in the company – assuming they are fully exchanged.

The offering will be increased in volume by up to €300 million if there is strong interest. The German state holds a further 14.8 percent Deutsche Telekom.

“We now wanted to send a clear signal to the market that both the German Ministry of Finance and KfW are committed to continue the privatization process of Deutsche Telekom with this instrument,” said KfW treasurer Frank Czichowski.

KfW also announced that investors in an outstanding €5-billion bond maturing in August will receive cash, not Telekom shares, as a result of the recent poor performance of the company’s stock.

Against a background of tough conditions in its home market, Europe’s largest phone company has seen its share price fall 19 percent over the past six months.

The privatization news made Deutsche Telekom the worst performing stock on Frankfurt’s DAX 30 on Tuesday, sending it 2.1 percent lower at €11.69 just after midday.


Vodafone makes bid for Kabel Deutschland

British mobile phone giant Vodafone said on Wednesday it had made a preliminary approach to Kabel Deutschland over a possible offer for the firm, Germany's biggest cable operator.

Vodafone makes bid for Kabel Deutschland
Photo: DPA

“Vodafone Group Plc notes the recent speculation regarding a potential offer for Kabel Deutschland Holding AG and confirms that it has made a preliminary approach to KD regarding a possible offer for the company,” the British group said in a short statement.

“There is no certainty that any offer will ultimately be made nor as to the terms on which any such offer might be made,” Vodafone added.

In reaction, Vodafone shares slumped 5.20 percent to 182 pence in London, while in Frankfurt Kabel Deutschland surged 6.92 percent to €79.90 in early deals.