DEUTSCHE TELEKOM, the German telecoms group, is examining the possibility of a bid for BT that could see the former monopoly valued at more than £25 billion, The Times has learnt.

It is understood that the German company, in which Blackstone, the American private equity house, recently snapped up a stake, has drawn up feasibility studies for a break-up of BT.

Sources aware of the group’s thinking, however, say that any formal approach is hampered by the German group’s current stock market valuation.

It is understood that Deutsche Telekom, whose chief executive, Kai-Uwe Ricke, said that it was seeking to play an “active role” in consolidation in the European telecoms sector, feels that a tie-up could allow it to participate more effectively in the wave of “converged communications” tie-ups taking place across the industry.

Although BT, valued at about £19 billion compared with DT’s €52.8 billion (£36.2 billion), is similar in structure to the German group — creating many potential synergies — it is now the only incumbent without a mobile arm, which Deutsche Telekom has in its T-Mobile business.

Deutsche — which analysts estimate has a war-chest of about €15 billion to spend on acquisitions this year — is believed to be attracted to BT’s global services division, which sells telecoms and IT services to corporates.

The division, which last year contributed 44 per cent of BT’s total group revenues, could help Deutsche to beef up its own business systems division, T-Systems, and help it to offset problems in its traditional calls business, which, like BT’s, is facing fierce competition and shrinking revenues. It is believed that under the Deutsche scenario this division, with BT’s retail business and network, would be split up and the spoils divided.

The deal could help to assuage investors in Deutsche, whose doubts about how the group will address fundamental problems about its long-term prospects have seen its shares drop 19 per cent during the past year.

As telecoms groups have reduced their debts and re-established themselves after the dot-com downturn, a wave of mergers and acquisitions has been triggered across Europe and beyond. BT’s Irish equivalent, Eircom, was recently snapped up by Babcock and Brown, the Australian investment group, in a €2.36 billion deal. Babcock, which once tried to bid for some of BT’s assets, has spoken of the potential to break up the group into its retail and wholesale divisions in an attempt to maximise the potential income.

Last year, Deutsche Telekom teamed up with KPN to bid for O2, the mobile operator, but talks were aborted at the eleventh hour. With the last independent mobile player, Virgin Mobile, now tied up with NTL, the cable business, its attempts to bolster its business through the UK mobile market have been thwarted and analysts had wondered where it would look for growth.

The decision by Blackstone to take a 4.5 per cent stake in the partly government-owned business was regarded by many City individuals as a precursor to a move on a significant target such as BT. Other private equity houses are already known to have been looking at the British telecoms giant.

Last night, a source close to the German company said: “It is a scenario that many people feel would make sense and many saw the Blackstone investment as a precursor to this deal.”

A spokesman for Deutsche Telekom said: “We do not comment on market rumours and speculation.”

BT also declined to comment.

MEGA-DEALER

• Blackstone, the US private equity group, is no stranger to the mega-telecoms deal

• The firm was part of a consortium of private equity players that acquired TDC, the incumbent Danish telecom group, in a €13 billion leveraged buyout

• In April the New York firm surprised investors by paying $3.3 billion for a 4.5 per cent stake and a board seat at Deutsche Telekom

• It is understood that Blackstone will play a chief role in the break-up of BT’s assets should the Germans be successful

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