Vivendi attempts surprise tactics against Deutsche Telekom

Angel Dobardziev, Practice Leader, IT Services

Vivendi surprised many, including Deutsche Telekom, by offering €2.5 billion for the latter's 49% stake in PTC, the Polish mobile operator. Vivendi and Deutsche Telekom have been fighting for years for the control of PTC, which has over 10 million customers, a 33% market share in the still-growing Polish market, and is now a very healthy cash generator.

A June ruling by the Vienna Arbitration Court - which ruled that Elektrim, a Polish conglomerate and the key remaining shareholder in PTC, could sell its 48% stake to Deutsche Telekom - was widely seen as handing the upper hand to the German incumbent. As a result, Deutsche Telekom a few weeks ago installed Klaus Hartmann, formerly CFO of its Hungarian operation, as the new CEO of PTC.

This is a new twist in a long-running saga, which smacks of desperation on the part of Vivendi. We believe most likely rationale for it is that Vivendi hopes that by waving a healthy cash pile in front of Deutsche Telekom's investors it can get them to put pressure on Deutsche Telekom's management to sell the stake. This is much the same way that Vodafone was forced to sell its Japanese unit and BT was forced to sell its mobile subsidiary O2 a few years ago by investors.

We don't think Vivendi's strategy will bear fruit. Deutsche Telekom has maintained Eastern Europe in general - and Poland in particular - as a strategic priority throughout the height of its debt crisis. It was unwilling to sell any of its Eastern Europe stakes then, and it is unlikely to be tempted now that its debt is under more control. Furthermore, Deutsche Telekom's relationship with its investors appears healthier than in the case of Vodafone - perhaps the key evidence of that is the fact that its share price has remained virtually unchanged since the offer was unveiled.

Angel Dobardziev is the IT Services Practice Leader, managing Ovum's advisory business in the IT Services area. In this role Angel leads Ovum's research on IT services market trends, vendor strategies and IT user priorities, delivered as both reports and tailored client engagements.