Takeover of BT by DT rumours

Following on from BT buying EE from Deutsche Telekom, due to complete next year, DT will have a 12% stake. They are trying to sell off their US assets and the rumour is BT would be where they would spend the proceeds.

Link.

Ah, so its now public, I was told this from an BTOR Guy a few Months ago along with BT selling off Openreach.

Paul

Why would BT sell off OR when we make money ? And you wants to take on BTOR pension liability ?

In reply to a post by btbert:

Why would BT sell off OR when we make money ? And you wants to take on BTOR pension liability ?

I am only going by what I was told.

Maybe its due to Ofcom moaning and this would "fully" separate BT from Openreach.

Who knows, like I said I am only going by what the BTOR Engineer told me and he was right with the other stuff that he told me.

Paul

TUPE the employees across then terminate them - end of pension liability.

I really doubt BT would sell off Openreach. The CEO ahead made it quite clear to staff internally they certainly don't want to sell off Openreach, it's very profitable.

The DT thing is possible I guess, to be honest I kind of hoped BT Group was getting too big to be taken over. Apparently not.

In reply to a post by Icaras:

The DT thing is possible I guess, to be honest I kind of hoped BT Group was getting too big to be taken over. Apparently not.

You'll just have to vote to leave the EU. That (if done collectively) would scupper it.

I kind of hoped BT Group was getting too big to be taken over.

Nothing is too big to be taken over in our global-facing Britain! We've flogged our railways, our power supplies, our fisheries, our water suppliers, our airports, our docks, our football teams, so why stop at telecoms?

Only the MPs and the Royal Family are safe ... hold on. Those nice folk in Quatar, having bought the World Cup, have slipped us a few £million to rebuild the Castle of Mey, one of the Windsors' Scottish pads. Our next lot is Buck House? Surely not?

Just how would TUPE help when the great majority of the pension liability is being incurred from people who've already retired? (At the time of privatisation, the organisation had 260,000 employees whilst now - in the UK - it's more like 85,000). Also, TUPE does not do anything for any pension benefits accrued to date. There is no way to force TUPEd employees to forgo those existing benefits. Also, the BT pension scheme has (for several years) been restructured to a much less beneficial career average pension scheme with higher rates of contribution.

So, even excluding some of the legal and industrial relations issues, your proposal would achieve very little, if anything, in the nature of responsibility for the pension deficit.

Existing pension liability will be covered by the Pension Protection Fund.

In reply to a post by RobertoS:

In reply to a post by Icaras:

The DT thing is possible I guess, to be honest I kind of hoped BT Group was getting too big to be taken over. Apparently not.

You'll just have to vote to leave the EU. That (if done collectively) would scupper it.

Why? There have been plenty of takeovers of British companies from outside the EU. Liberty didn't face any difficulty when it chose to take over VM.

Unless you mean that by taking us out of the EU our economy will suffer so much that BT and its assets cease to be of any interest. That sounds plausible at least

Edited by Andrue (Mon 08-Jun-15 21:46:41)

Not necessarily. There can be deficit taken into account with Purchase Price..

The view in the linked article, and others, is that the EU and DT both fancy a large cross-border infrastructure within the EU. So if we weren't in it they would be far less interested.

That's quite apart from what our own government, security and Competition and Mergers Authority would think of a foreign company fully owning and controlling our telecommunications. Including the government's.

That would up the purchase price somewhat

BT�s fundamental approach since privatisation seems to be �keep betting on equities and hope for the best�. It runs a huge asset and liability mismatch � a target asset allocation of 62 per cent in equities and alternative assets � £20bn � over three times its market cap. BT is a badly run hedge fund that happens to own a phone network.

I think it highly likely the government would scupper the deal unless Openreach was spun off first, they will not want that much telecoms infrastructure under the control of a foreign entity.

Edited by deleted (Mon 08-Jun-15 22:36:52)

Why not, half the gear is Chinese anyway probably with back doors.

In reply to a post by Banger:

Why not, half the gear is Chinese anyway probably with back doors.

Agreed. Plus most (all?) of our power generation is foreign owned now. Anyway foreign ownership doesn't mean they bring in their own staff and takeover. In practical terms it doesn't make much difference.

That's ridiculous. The Pension Protection Fund only takes over when the original company responsible for covering any liability goes bankrupt. In BT's case it isn't even relevant as, in the event of bankruptcy, the pension deficit is covered by the crown guarantee.

Company's simply can't dump responsibilities for pension fund deficits in the way you describe. The best they can do is limit the the growth of new liabilities by changing the schemes. However, any benefits already accrued under defined benefit schemes remain. Clearly defined contribution systems are another matter. By definition they don't accrue deficits.

It's hardly the same. There's not much potential for mischief with electricity generation, but with telecoms all you need is a small number of people with access to sensitive equipment and you've got a mass of valuable data. The company may not even have a choice in the matter, intelligence services can compel them to intercept information without being able to reveal that publicly.

And remember, the German government is still very sore about British telcos, including BT, doing exactly that to them on behalf of GCHQ.

The pension regulator actually gets a say in takeovers.

In some they have made it a condition that as part of the takeover the pension funds are fully funded. So the Buyer has to inject £x billion into the pension fund.

This usually has the effect of reducing the price to shareholders of the existing business.thereby reducing their incentive to sell. But increasing the attractiveness to the buyer if it means a lower overall price as the business is then not burdened with remedial payments in the future.

Indeed, with takeovers the new owner will take on the responsibility, at least for current employees. In any event, it gets factored into the detail and will be reflected in the price offered. Of course any such pension liability will have been discounted in the share price in the first place.

In reply to a post by Andrue:

In reply to a post by Banger:

Why not, half the gear is Chinese anyway probably with back doors.

Agreed. Plus most (all?) of our power generation is foreign owned now.

4 of the big 6 of energy suppliers are foreign owned (SSE and Centrica/BG being the 2 exceptions).

In reply to a post by Icaras:

I kind of hoped BT Group was getting too big to be taken over. Apparently not.

BT is a comparitive minnow on current valuation (approx. £37bn) as far as large takeover/merger values are concerned (biggest being AOL-Time Warner merger at $186.2bn).