Everything Everywhere, the U.K. mobile-phone venture of France Telecom SA (FTE) and Deutsche Telekom AG (DTE), may get a takeover bid from former chief Tom Alexander, who is trying to arrange financing for the effort, people familiar with the matter said.
Alexander met with France Telecom a few weeks ago for an informal discussion, one person said. The talks are at an early stage and may not lead to a bid, said the people, who asked not to be identified because the discussions are private.
A takeover would allow Alexander to resume the role he quit last year and challenge Vodafone Group Plc (VOD) and Telefonica SA (TEF) in the U.K. as carriers prepare to start offering faster fourth- generation wireless services. London-based Everything Everywhere, formed in a 2010 merger of France Telecom’s Orange unit and Deutsche Telekom’s T-Mobile division, became the largest mobile-phone operator in the U.K. after its creation.
Everything Everywhere may be valued at 12 billion euros ($15 billion), based on a multiple of about seven times its earnings before interest, taxes, depreciation and amortization, Nick Brown, an analyst at Espirito Santo, estimated this year.
The Financial Times earlier reported Alexander’s plan to gather financing for a bid. Alexander has approached private- equity firms KKR & Co. (KKR:US) and Apax Partners LLP to help finance an offer, the newspaper said.
Looking for Exit
“In relation to media speculation, France Telecom clarifies that no offer from a third party to acquire the business has been received nor has been invited,” Tom Wright, a spokesman for the Paris-based carrier, said yesterday. “Everything Everywhere is a strong business with a clear leadership position in the U.K. market and its shareholders are 100 percent supportive of the group, its management and its strategy.”
Kristi Huller, a spokeswoman for KKR in New York, declined to comment, as did Andreas Leigers, a spokesman for Bonn-based Deutsche Telekom. A call placed to Apax outside of regular business hours went unanswered.
The German phone company was evaluating options for an exit from the U.K. as it sought to raise cash after failing to sell its T-Mobile USA unit, people with knowledge of the matter said in February. Deutsche Telekom was in the early stages of deciding whether to sell its half of Everything Everywhere, the people said.
France Telecom and Deutsche Telekom created Everything Everywhere in a bid to save more than a total of 4 billion euros in network, marketing and administrative costs by 2014. That deal, cutting the number of network operators in the country to four from five, paved the way for joint procurement projects and network sharing across all their markets.
Alexander stepped down last year after leading the merged company since its formation. Alexander said he decided to resign for personal reasons and to pursue other interests.
The venture will face more intense competition, after Vodafone and Telefonica this month agreed to set up a 50-50 venture to combine parts of their U.K. mobile-phone networks to lower costs as they move toward 4G services.
To contact the reporters on this story: Jonathan Browning in London at firstname.lastname@example.org; Jesse Riseborough in London at email@example.com; Marie Mawad in Paris at firstname.lastname@example.org
To contact the editor responsible for this story: Kenneth Wong at email@example.com