‘I want my money back’, says Deutsche Telekom boss about BT stake

The chief executive of Deutsche Telekom has called obtaining a stake in BT the “biggest mistake” he ever made, saying: “I want my money back.”

Tim Höttges told the Financial Times that he regretted a 2015 deal that saw the German group take a £5.6bn stake in its British counterpart, which has since lost almost £4bn of its value.

“It was too early and I didn’t understand all of the obstacles around BT,” he said.

Like many of its European peers, the former British monopoly has suffered from stagnant profits, intense competition and a falling share price as it invests billions of pounds in upgrading its broadband network to full fibre and rolling out 5G technology.

Deutsche Telekom has managed to defy this wider trend in large part thanks to its lucrative bet on the US market via T-Mobile US; its shares have risen more than 60 per cent over the past five years.

The German operator gained its stake in BT as part of a deal that saw it and France’s Orange sell British mobile operator EE to BT for £12.5bn.

Orange settled mostly for cash as part of the sale. But Höttges said he took the 12 per cent stake in BT because he was “panicking” about gaining exposure to a company that included both broadband and mobile operations.

Despite the lost billions, Höttges vowed he “will get that money back”, saying he had a “clear understanding” of options, including increasing the stake further in the hope that BT’s fortunes would improve or partnering with another big shareholder, without specifying what action they might take.

“I am not nervous, I will stay quiet, and do the portfolio transaction when I’m ready to do so. There will be a time when we will do a deal,” Höttges said, adding that BT is the “cheapest telco” and has a lot of potential to increase its value.

Franco-Israeli tycoon Patrick Drahi has built an 18 per cent stake in BT, although his ability to build the holding further is challenged by the UK’s new powers to scrutinise and limit foreign ownership of assets regarded as important to national security.

“Patrick Drahi is one of the smartest cats,” said Höttges, referring to the stakebuilding in BT. “He is sitting in front of the hole waiting for when the mouse is ready, to catch it.”

Over the past year, several telecoms tycoons and private equity groups have taken multibillion-pound stakes in what they perceive to be undervalued British telecoms groups. French billionaire Xavier Niel and US group Liberty Global have acquired chunks of Vodafone’s shares, joining United Arab Emirates telecoms operator e&, which has built a 13 per cent stake.

However, Höttges was critical of this approach, saying it risked companies being eventually split apart unnecessarily and investment needs being sidelined, which would be “very bad for customers, very bad for the sovereignty of Europe [and] very bad for infrastructure”.