Warburg Pincus enters race for T-Mobile Netherlands: sources

LONDON/PARIS (Reuters) - U.S. private equity firm Warburg Pincus [WP.UL] is looking to bid for Deutsche Telekom's DTEGn.DE T-Mobile Netherlands division, exploiting the industry experience of two of its senior partners, three sources familiar with the matter said on Thursday.

Warburg Pincus is working on the deal with Deutsche Telekom’s former chief executive officer René Obermann who was hired by the New York-based private equity fund in February.

Obermann, also a former chief executive of Dutch cable operator Ziggo, knows the Dutch market well and is working closely with another Warburg Pincus partner, Andrew Sukawaty, who chaired Ziggo while Obermann was its CEO.

Spokesmen at Deutsche Telekom and Warburg Pincus declined to comment.

Sukawaty, 60, joined Warburg Pincus in December 2014 to identify investment opportunities in the telecoms industry.

He is the non-executive chairman of satellite operator Inmarsat ISA.L and a former vice chairman of British mobile phone operator O2.

Reuters reported on Tuesday that T-Mobile Netherlands expects non-binding offers by Nov. 16.

At least four other private equity firms, including Apax and CVC, are vying for the asset which is valued at up to 3 billion euros, several sources said.

Deutsche Telekom is weighing an exit from the Netherlands because it is a very competitive market where consumers are quickly shifting to all-included mobile and fixed bundles.

The sales process has so far mainly attracted interest from buyout funds while trade buyers have yet to emerge.


A source close to French entrepreneur Xavier Niel's telecoms group Iliad ILD.PA said Iliad has no plans to bid for the company which lags competitors KPN KPN.AS and Vodafone VOD.L in the Dutch market, another source said.

Cable group Liberty Global could still make a move for T-Mobile Netherlands, some of the sources said, pointing to its existing operations in the Netherlands and the ability to pay more than private equity firms due to synergies with its existing operations.

Liberty bought Dutch cable provider Ziggo last year, and is awaiting approval to buy a mobile operator in Belgium as it bets more on all-inclusive bundles of services.

But one banker said Liberty could have already purchased Deutsche Telekom’s Dutch unit if it intended to, rather than waiting for the auction.

T-Mobile Netherlands has seen its earnings before interest, taxes, depreciation, and amortization (EBITDA) take a hit this year, with a 17 percent decline to 382 million euros in the first nine months of the year.

If the slide continues at the same pace, its annual core earnings would then plunge from 630 million euros in 2014 to roughly 520 million euros this year.

Buyout funds working on the dossier estimate its core earnings to come in at around 450 million euros next year, valuing the business at roughly 6.5 times its EBITDA.

Additional reporting by Arno Schuetze in Frankfurt; editing by Freya Berry and Keith Weir