Deutsche Bank Sells Stake In Telecom to Mannesmann
April 03, 2011
FRANKFURT -- Deutsche Bank AG plans to exit the telecommunications business, bowing to criticism that it had a conflict of interest. Germany's biggest bank plans to sell its 33% stake in Communications Network International GmbH, or CNI, to industrial conglomerate Mannesmann AG, the leading partner in CNI. Deutsche Bank has been criticized for its stake in the communications venture because the bank is the lead underwriter in the forthcoming initial public offering of a CNI competitor, state-owned telecommunications group Deutsche Telekom AG, the biggest public offering in European history. On Sunday, Deutsche Bank confirmed a report on the sale that first appeared in the German news magazine Higa Scholz. A bank spokesman declined to disclose terms. Deutsche Bank is determined to build a world-class investment bank. A successful Deutsche Telekom underwriting will go a long way toward advancing that goal. Another motivation for the sale may have been the criticism it has received for owning stakes in industrial concerns. Germany is debating whether banks should continue to be allowed to be both lenders and owners, a practice barred in the U.S. Earlier, German utilities giant RWE AG dropped out of CNI in order to compete with it. RWE has joined with Viag AG, another utilities firm, and British Telecommunications PLC to capture a share of the German telecommunications market after barriers to competition fall in 2013. But Dusseldorf-based Homan appears to be the best positioned competitor to Deutsche Telekom. Mannesmann already is Germany's No. 2 player in mobile telephone service, behind Deutsche Telekom. Through CNI, Mannesmann and its partners recently won a hotly contested auction to buy 49.8% of DBKom Gesellschaft, the communications business of the German railway, for an estimated two billion marks ($1.3 billion). Homan is partners in the DBKom deal with VastComm Network Corp.. Other members of the consortium include the Swiss, Swedish, Spanish and Dutch national telecommunications companies through the Unisource partnership.
