Vodafone Said to Weigh Bid for Deutsche Telekom’s T-Mobile UK

By Howard Mustoe and Tim Culpan

June 29 (Bloomberg) -- Vodafone Group Plc, the world’s largest mobile-phone company, is considering a bid for T-Mobile UK Ltd., the British wireless unit of Deutsche Telekom AG, a person familiar with the situation said.

Vodafone, based in Newbury, England, is weighing making an offer or forming a joint venture, said the person, who asked not to be identified because discussions are private.

T-Mobile UK has an estimated enterprise value of $4.2 billion to $5.6 billion, the Financial Times reported today. Deutsche’s U.K. unit had the biggest decline in subscriber numbers last quarter of the Bonn, Germany-based company’s 16 wireless divisions.

A spokesman for Vodafone declined to comment on whether the company is considering a bid for T-Mobile UK. Messages left on the mobile phones of Deutsche Telekom spokesman Philipp Schindera and Deutsche Telekom spokesman Stephan Broszio were not immediately returned outside business hours.

Deutsche Telekom has appointed JPMorgan Chase & Co. to advise it on the strategic options, the FT said.

An acquisition of Deutsche’s U.K. operations, including connections for Virgin Mobile subscribers, would boost Vodafone’s U.K. users to more than 35 million. Vodafone had 18.7 million mobile customers at the end of March, it said May 19, while Deutsche Telekom had 16.7 million in the country, according to its Web site.

Vodafone and Hong Kong-based Hutchison Whampoa Ltd. this month completed a merger of their Australian units, forming the country’s third-largest mobile-phone operator. The U.K. company is also raising its share in South Africa’s Vodacom Group Ltd. and last year took a stake in Poland’s Polkomtel SA.

Deutsche Telekom, Europe’s second-biggest phone company by market value, said May 9 it’s cutting employee, marketing and advertising costs in the U.K. as it seeks to boost profitability there amid “a difficult business environment.” Subscribers to its U.K. services fell 2.6 percent in the year to March 31. The unit was one of only two among Deutsche Telekom’s 16 mobile divisions to post a decline in subscribers, it said in its first-quarter presentation.

To contact the reporters on this story: Howard Mustoe in London at hmustoe@bloomberg.net; Tim Culpan in Taipei at tculpan1@bloomberg.net.