Deutsche Telekom Dutch unit draws interest from Apax, CVC -sources

* Bidders to submit indicative offers by Nov. 16 - sources

* T-Mobile Netherlands valued at up to 3 bln euros - sources

* Telecom and cable operators could enter race - sources

(Updates with comments from Deutsche Telekom CEO)

By Arno Schuetze and Pamela Barbaglia

FRANKFURT/LONDON, Nov 11 (Reuters) - Deutsche Telekom (Xetra: 555750 - news) 's

T-Mobile Netherlands division has drawn interest from

private equity groups Apax and CVC (Taiwan OTC: 4744.TWO - news) , which are putting the

finishing touches to their rival bids, sources familiar with the

matter told Reuters.

The unit, which lags competitors KPN (Amsterdam: KPN.AS - news) and Vodafone

in the market, could be valued at up to 3 billion euros,

and is being sold in an auction process led by Credit Suisse (LSE: 0QP5.L - news) ,

the sources said.

The bidders have been asked to submit indicative offers by

Nov. 16.

Deutsche Telekom is weighing an exit from the Netherlands

because it is a very competitive market where consumers are

quickly shifting to all-included mobile and fixed bundles. On

Wednesday local player Tele2 (Stockholm: TEL2-A.ST - news) launched its long-awaited mobile

service, a move that could pressure prices.

Other investment firms, including U.S (Other OTC: UBGXF - news) . buyout funds Bain

Capital (Other OTC: CGHC - news) and Providence, are also expected to enter the race, the

sources said.

It (Other OTC: ITGL - news) remains to be seen whether any telecom or cable companies

will emerge as bidders, but some of the sources said French

entrepreneur Xavier Niel's telecoms group Iliad (Paris: FR0004035913 - news) and

cable group Liberty Global (NasdaqGS: LBTYA - news) could be interested in the

asset.

Liberty is already present in the Netherlands as cable

provider Ziggo (Other OTC: ZIGGY - news) , and is awaiting approval to buy a mobile

operator in Belgium as it bets more on all-inclusive bundles of

services.

Spokesmen at Deutsche Telekom, Liberty Global, and the

private equity funds declined to comment. Iliad could not

immediately be reached for comment.

Deutsche Telekom Chief Executive Tim Hoettges said on

Wednesday "in the Netherlands, we have to find our way in a

difficult landscape."

Speaking at the Morgan Stanley TMT conference in Barcelona,

he said the company has been unable to define a "strategic

positioning that will create value in the Dutch market."

T-Mobile Netherlands has seen its earnings before interest,

taxes, depreciation, and amortisation (EBITDA) take a hit this

year, with a 17 percent decline to 382 million euros in the

first nine months of the year.

If the slide continues at the same pace, its annual core

earnings would then plunge from 630 million euros in 2014 to

roughly 520 million euros this year.

Buyout funds estimate its core earnings to come in at around

450 million euros next year.

One telecoms banker said Liberty will look at the Dutch

T-Mobile operations but it will more likely go to a private

equity firm for 6 to 6.5 times EBITDA.

Liberty is seen as being able to pay more than private

equity firms for the operations due to synergies between their

operations, but it could have already purchased them if it

intended to, the banker said.

Berenberg's analyst Paul Marsch said earlier this year that

T-Mobile Netherlands was worth 6 times its EBITDA.

"Applying 6 times to the Netherlands ... might raise a few

eyebrows given that the broader European telecoms sector is

trading at closer to 8 times, but Deutsche Telekom's Dutch

operation is underperforming in a market which we think will see

increased competitive tension with the launch of Tele2's 4G

service," he said in a note.

Deutsche Telekom's options for the unit include a

partnership, merging T-Mobile Netherlands with another group, or

swapping it for a minority stake in another company, the sources

said.

Deutsche Telekom's decision to put the Dutch mobile operator

on the block is part of a plan to become a packaged service

provider, which includes internet as well as television and

mobile, sources told Reuters last month.

(Additional reporting by Harro ten Wolde in Frankfurt and Leila

Abboud in Paris; Editing by William Hardy and David Evans)