Deutsche Telekom AG (DTE), Europe’s biggest phone company, is considering a bid for Slovenia’s Telekom Slovenije d.d. to add to its eastern European operations, according to people familiar with the matter.
JPMorgan Chase & Co. (JPM) and Barclays Plc (BARC) are advising the German carrier on an offer for the operator that is about 73 percent owned by Slovenia’s government, said one of the people, who asked not to be identified because the plans aren’t public. Telekom Slovenije rose 2.1 percent to 146 euros in Ljubljana for a market value of 954 million euros ($1.3 billion).
Timotheus Hoettges, who took over as Bonn-based Deutsche Telekom’s chief executive officer this year, has staked out a plan to extend the carrier’s network, already stretching from Germany to Greece, as he bets on an economic recovery. The region’s governments are selling assets to reduce debt and be able to more easily refinance themselves.
Representatives for Deutsche Telekom, JPMorgan and Barclays declined to comment.
Slovenia aims to conclude a sale by the end of the year, Economy Minister Metod Dragonja said in an interview last week. The country with a population of 2 million hired Citigroup Inc. to advise on the sale.
The government injected 3.2 billion euros of capital into its mostly state-owned banking system in December after the industry pushed the nation to the brink of a bailout.
Deutsche Telekom fell 0.2 percent to close at 11.38 euros in Frankfurt. The carrier has a market value of 50.7 billion euros.
Telekom Slovenije may attract other carriers and private-equity firms, one of the people said. Phone companies with assets in the Balkans include Vodafone Group Plc and Telekom Austria AG.
Telenor ASA of Norway last year agreed to buy the Bulgarian unit of Hellenic Telecommunications Organization, also known as OTE. Turkcell Iletisim Hizmetleri AS had also expressed interest in the business.
Deutsche Telekom, Germany’s former phone monopoly, surpassed Telefonica SA last year as Europe’s biggest carrier by revenue. It agreed to acquire fixed-line provider GTS Central Europe last year and bought out minority investors in its Czech unit in February.
Deutsche Telekom has also offered to buy the Greek government’s 10 percent stake in OTE, people familiar with the talks said in January.
Even as the German company expands, it is trying to keep costs under control. It agreed today with the Ver.di union to increase wages for its 55,000 full-time workers in the nation by at least 4.6 percent over two years while ruling out firings.
Hoettges has also pushed for an overhaul of Deutsche Telekom’s computer-services unit T-Systems, which plans to eliminate 4,900 employees in Germany alone through 2015 as it refocuses on higher-margin areas such as data hosting and connected cars.
Slovenia is offering 72.8 percent of Telekom Slovenije. That includes stakes from state-owned agencies Slovenska Odskodninska Druzba d.d. and Kapitalska Druzba d.d., as well as insurer Zavarovalnica Triglav d.d. and reinsurer Sava Re d.d.
On April 2, Slovenska Odskodninska said a group owning 2.8 percent of Telekom Slovenije joined the original sellers, bringing the total stake on the block to 75.6 percent.