Also in today's EMEA regional roundup: MegaFon sales grow; Austrians fret about 5G health effects; Freenet sticks to guidance.

Iain Morris, International Editor

August 9, 2019

3 Min Read
Eurobites: DT Has No Plans to Sell BT Shares
  • Deutsche Telekom has no plans to sell its shares in BT in the likely event of a "no-deal Brexit," said Timotheus Höttges, the German operator's CEO, during a phone call with reporters this week. The German incumbent took a 12% stake in in its UK peer back in 2016, when it sold BT its 50% stake in UK mobile operator EE. France's Orange, EE's other shareholder at the time, took a smaller BT stake of 4% and a larger cash payment. It has subsequently sold shares and in June was reportedly poised to sell its final 2.5%. Asked about his own plans, Höttges answered: "We are not planning to sell our shares in BT."

    The brief statement comes after the German operator said "BT continues to be an integral part of our strategic orientation" in its 2018 annual report. Deutsche Telekom's stake in the business makes it the UK operator's biggest individual shareholder, but there is investor concern that a no-deal Brexit -- under which the UK would quit the European Union in October without any kind of agreement -- could trigger a UK recession, with knock-on effects for BT and other companies. For Deutsche Telekom, selling shares now would mean writing off a huge investment: Since BT finalized its takeover of EE on January 28, 2016, its share price has fallen by 63% on the London Stock Exchange, to close at 173.56 pence sterling on August 8. That means Deutsche Telekom's stake is now worth about £3.5 billion ($4.2 billion) less. Ouch.

    • MegaFon, one of Russia's "big three" mobile operators, reported a 4.5% increase in sales and a 20.6% rise in operating income (before depreciation and amortization) for its second quarter, compared with the year-earlier period. With revenues of 85.6 billion Russian rubles ($1.3 billion), and operating income reaching RUB38.9 billion ($590 million), the company had 77.6 million customers across its footprint in Russia and central Asia at the end of June. CEO Gevork Vermishyan hailed progress on digital transformation, drawing attention to a recent agreement with Chinese Internet giant Alibaba for the creation of a Russian ecommerce venture called AliExpress. The update comes weeks after rival MTS was reported to have signed a deal with Chinese equipment behemoth Huawei for the construction of a 5G network in Russia. Locals may soon be swapping blinis and vodka for dim sum and Tsingtao beer.

    • As Europeans get their first taste of 5G services, Austrian authorities are waking up to the possible health risks posed by mobile technology. The country's parliament has accordingly commissioned a study on "5G mobile communications and health" from the Austrian Academy of Sciences and the Austrian Institute of Technology. Results will be published on the parliament's website by January 2020 -- about nine months after the country's 5G spectrum auction -- allowing citizens to read all about the downsides on their 5G-connected devices.

    • German operator Freenet clung to its full-year guidance of stable revenues after reporting a 2.8% increase in sales for the second quarter, to about €1.4 billion ($1.6 billion), compared with the year-earlier period. The operator, which provides mobile and TV services in Germany, also continues to expect earnings (before interest, tax, depreciation and amortization) of between €420 million ($471 million) and €440 million ($493 million), after making exactly €441.3 million ($494.5 million) in 2018. Second-quarter earnings were up 10.5% year-on-year, to €215.5 million ($241.5 million), thanks largely to positive regulatory effects (it's not often that happens). Freenet said its overall subscriber base grew by 62,000 customers in the first six months of the year, giving it 8.224 million customers in total.

      — Iain Morris, International Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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