Deutsche Telekom AG — M&A Activity 1999

Aug 6, 1999

News Details

Ad-hoc | 6 August 1999 07:56

Ad hoc-Service: Deutsche Telekom AG Engl. Fas

Ad-hoc Mitteilung übermittelt durch die DGAP. Für den Inhalt der Mitteilung ist allein der Emittent verantwortlich. —————————————————————————— Ad hoc notification of Deutsche Telekom AG pursuant to @ 15 of the Security Trading Act (WpHG) Bonn, 6 August 1999 Deutsche Telekom acquires One 2 One Position in Great Britain significantly strengthened Major step in one of the most important telecommunications markets Deutsche Telekom announces that is has agreed to acquire the UK mobile telephone operator One 2 One. The German market leader will thus substantially strengthen its position in one of Europe’s major markets. “This acquisition is of vital importance for Deutsche Telekom. It meets two of the core requirements in our growth strategy. On the one hand, we are continuing to expand our highly successful mobile communications business in Europe, and on the other, we are establishing a strong presence and a solid basis for growth in the United Kingdom, one of Europe’s most important markets,” said Dr. Ron Sommer, Deutsche Telekom’s CEO. “We are acquiring an attractive and well established mobile communications network operator with a strong brand name and a substantial potential for growth in one of the EU’s primary markets.” The purchase price is 6.7 billion pounds. In addition, Deutsche Telekom will redeem approximately 200 million pounds in shareholder loans. One 2 One also has non-recourse-debt of approximately 1.5 billion pounds. Cable & Wireless plc and MediaOne Inc currently each hold a 50 percent stake in One 2 One. The transaction is subject to the approval of Deutsche Telekom’s Supervisory Board and clearance by the European Union’s regulatory authority. One 2 One, which has a 16 percent share of the market, is the fourth largest and fastest growing mobile communications network operator in the UK. The penetration rate for mobile communications in the British market is 27 percent (as of 1 June 1999), compared to 20 percent in Germany. One 2 One is one of the sector’s key players. In the second quarter of 1999 alone, it acquired more than 400,000 new customers and substantially increased its percentage of business customers. More than 350,000 business customers are currently using One 2 One’s network. In the year ended 31 March 1999 One 2 One’s income before taxes, interest, depreciation and amortization was 112 million pounds compared with a loss of 39 million pounds in the previous year. In the 1998/9 year, the business recorded a 42 percent increase in revenue to 781 million pounds. One 2 One was launched in 1993 with the world’s first fully digitized network based on the GSM 1.800 standard. The network covers 97 percent of the population. The company, which has been experiencing rapid growth, now has some 2.65 million customers. This means that the new management, which took over at One 2 One in 1996, has achieved a fourfold increase in subscribers, increasing its market share by ten percent. One 2 One is regarded as a pioneer in innovative pricing and packaging. For example, the company was the first mobile communications provider in the UK to introduce a digital prepaid service. Deutsche Telekom’s mobile communications subsidiary, T-Mobil, and One 2 One will be able to exploit a number of synergies, in addition to roaming. For example, the partners will be able to reap mutual benefits from their substantial marketing experience. One 2 One has very successfully opened up the British mass market with prepaid cards, a market segment that is still relatively underdeveloped in Germany. In return, T-Mobil will be able to, for example, share its experience with business customers. There are also synergies and potential savings in the area of technical solutions, such as the implementation of UMTS and GPRS, and more generally in procurement. After acquiring One 2 One, Deutsche Telekom will have some twelve million mobile communication subscribers in the European mobile communications market, including its majority holding in Austria and its stakes in Hungary, Poland and the Czech Republic. Deutsche Telekom is represented in Great Britain by MetroHoldings, which was founded in April 1998. The joint venture, operated together with the British telecommunications company Energis and France Telecom, installs high-performance modern fiber-optic network infrastructures. These Metropolitan Area Networks (MANs) are first being implemented in the economic centers, London, Manchester, Birmingham, Leeds and Bristol. They enable the strategic alliance, Global One, to offer high-performance telecommunications networks to business customers. In addition, through its stake in Detecon Deutsche Telepost Consulting, Deutsche Telekom is represented in southern England with Eurobell as a regional provider. Eurobell offers telephone, TV, data and Internet services. T-Mobil (Deutsche Telekom MobilNet GmbH), which has some 7.4 million customers, is Germany’s largest provider of mobile communications services. T-Mobil started doing business in 1993 as an economically independent company. Deutsche Telekom AG’s wholly-owned subsidiary is operating with more than 6,000 employees in a dynamic growth market, which is seeing growth rates exceeding the high growth rates recorded for the telecommunications sector. T-Mobil obtained some 7.5 billion marks in revenue in 1998. With the exception of historical information, the matters discussed in this release are forward-looking statements that involve risks identified in filings with the U.S. Securities and Exchange Commission. End of notification Ende der Mitteilung