Blackstone buys $3.3 billion stake in Deutsche Telekom

The Blackstone Group, a private equity company, has agreed to purchase a 4.5% stake in Deutsche Telekom, in a move to become a major shareholder in Europe’s largest telecommunications provider, the companies said Monday.

Blackstone will buy 191.7 million shares, valued at around €2.7 billion ($3.3 billion), from the German state-owned bank KfW, whose stake will fall to 17.3%.

The KfW and the German government, which still holds a 15.2% stake in Deutsche Telekom, will remain the network operator’s largest shareholders.

Blackstone, which is located in New York, aims to be a long-term investor in the company and offer support, particularly at the supervisory board level, in “executing a strategy of long-term value creation for all shareholders,” said Blackstone Chairman and CEO Stephen Schwarzman, in a statement.

The investment in Deutsche Telekom comes as the incumbent telco, based in Bonn, Germany, faces fierce competition from Internet-based rivals and low-price mobile operators.

Under CEO Kai-Uwe Ricke, the German carrier is slashing jobs to help reduce operating costs and investing €3 billion ($3.6 billion) in the construction of a new high-speed network to spur growth.

The network will string fiber optic cable to the curb of homes in 50 German cities. To bridge the remaining distance to homes, the company plans to install Very High Speed DSL (VDSL) technology, offering speeds up to 50Mbps.