BT Open To Deutsche Telekom Partnerships After EE Deal

BT will consider working with Deutsche Telekom on joint-projects and partnerships once the former’s £12.5 billion takeover of EE is completed.

As per the terms of the deal, the German telecom giant will become BT’s largest shareholder, with a 12 percent stake.

Speaking to the Financial Times, BT Chairman Sir Mike Rae suggested strategic partnerships and media deals between the two companies could be a possibility.

Deutsche Telekom partnership

Rival Virgin Media is part of the Liberty Global group of cable operators, while Sky has operations in Germany and Italy, demonstrating the feasibility of pan-European collaboration. However Rae told the newspaper that he wasn’t entertaining the prospect of a potential takeover by Deutsche Telekom in the short-term.

He did however reiterate that BT wants to retain as many of EE’s top level management team as possible when the two businesses start to integrate. It has already been confirmed that EE CEO Olaf Swantee will depart following the conclusion of the deal and the FT has reported separately that the EE branding will be retained by BT post-merger.

Rae ruled out a bid for Channel 4, which the government could put up for sale as part of its ongoing cost-cutting crusade, but did not miss an opportunity to reiterate BT’s belief that Openreach should remain part of the company as a functionally separate unit.

Ofcom is currently in the process of a once-in-a-decade review of the UK communications market and is considering whether to relax or strengthen regulatory controls or Openreach and might even make it fully independent. Most of BT’s rivals want separation, claiming the current structure stifles investment and hands BT an unfair advantage – accusations the company denies.

“Functional separation has been hugely successful. Why would you stop something that is successful?” Rae told the FT. “And in practice, who is going to buy it? How long would it take? With that level of uncertainty we have a fiduciary duty over the level of investment we can make in that period.”

Earlier today, BT appointed its current group CIO and CEO of BT Technology, Service and Operations (BT TSO) as the new CEO of Openreach.