Telecoms giant Deutsche Telekom has agreed to sell a 55% stake in six of its German cable TV networks to a consortium headed by John Malone’s Liberty Media Group.
The $2 billion deal was sealed in a letter of intent signed yesterday by Deutsche Telekom, Liberty and American financier Gary Klesch. Liberty later announced that it hoped to complete the deal by the middle of the year.
The six regional cable TV companies are based in Bavaria, Brandenburg, Bremen, Rhineland Palatinate, Saar, Berlin, Hamburg, Schleswig-Holstein, Thuringia, Saxony, Lower Saxony and Saxony Anhalt. Liberty will gain access to about 10 million subscribers in the world’s second-largest television market.
The consortium also has an option to increase its stake to 75% minus one share, with the rest owned by Deutsche Telekom. Although a minority shareholder, DT has undertaken not to interfere if Liberty decides to compete directly with its extant activities by upgrading the cable services to offer voice communications, interactive TV and internet access.
The deal will also relieve some of the financial pressure on Deutsche Telekom, whose mounting debts have prompted speculation that chief executive Ron Sommer may be forced to resign.
News source: Wall Street Journal