Deutsche Telekom yesterday revealed plans to cash in on the boom in internet stocks by floating its T-Online business in mid-April. Analysts are already putting a price tag of between €20bn (£12bn) and €30bn on T-Online, which is Europe's biggest internet service provider.
Deutsche Telekom, which owns the One2One mobile phone business in Britain, said that it would be keeping a "clear majority stake" in T-Online, with indications that it may offer a 10% stake to investors.
The German telecoms operator is also lining up a flotation of its T-Mobil mobile phone business towards the end of the year.
Though the sales, plus the disposal of the 10% stake in the American telecoms company Sprint, are bound to raise speculation that Deutsche Telekom is bolstering its coffers before hitting the acquisitions trail, the proceeds of the T-Online float are expected to remain with the internet business.
The stake on offer is expected to come from issuing new stock, however, allowing T-Online to use its own shares to make acquisitions without Deutsche Telekom having to give up control.
"By offering T-Online shares on the stock market, Deutsche Telekom is broadening the basis which exists for its subsidiary's growth strategy," the group said.
The T-Online sale will be at least two months ahead of the sale of the next tranche from the 66% of Deutsche Telekom shares still controlled by the state. Under the terms of its most recent sale, the government cannot sell any more shares before June. News of the T-Online sale boosted Deutsche Telekom shares by 4% on the German market as investors digested the likely value of T-Online.
"The value of internet stocks is rising by the hour," according to analyst Theo Kitz at Merck Finck and Co.
At the press conference yesterday Deutsche Telekom's chairman Ron Sommer refused to be drawn on the likely value of T-Online. "It depends on what the stock market does,"he said.
Deutsche Telekom said that T-Online had doubled its customer base to 4.2m subscribers in the past two years. Monthly growth had been running at around 100,00 a month for most of 1999 but had doubled in the last quarter of the year.
Traffic volumes had also risen sharply. Though Mr Sommer refused to be drawn on the Deutsche Telekom's acquisition strategy in the face of the rapid consolidation in the industry, the group is known to be keen to expand in both fixed and mobile telephony in Europe.
In addition to One2One, it also owns max.mobile in Austria and made an unsuccessful bid for Telecom Italia last year with the German group's position as a state controlled company proved a key stumbling block.
Analysts are looking to Deutsche Telekom to make international acquisitions to offset tough conditions in its home market.
Last week the group reported profits last year had fallen by 45% to €1.2bn - broadly in line with expectations, largely as a result of price cutting in the fiercely competitive and recently deregulated German market.
Revenues were disclosed as virtually unchanged at €35.3bn.
