Deutsche Telekom to buy a stake in Wi-Fi sharing service Fon

Germany's biggest telco has signed a letter of intent with Fon, and is thought to be ready to invest in the company, reports say.

Germany's biggest telco, Deutsche Telekom, is reported to be buying a stake in Wi-Fi hotspot company Fon.

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FON, based in Spain, bills itself as a "crowdsourced Wi-Fi" company, whereby customers make some of their bandwidth available free to other Fon users, and can then take advantage of other FON customers' Wi-Fi.

According to a report in the Wall Street Journal on Saturday, Deutsche Telekom is considering buying a stake in the company to tackle rising demand for mobile data.

With an agreement in place with Fon, Deutsche Telekom's customers would be able to use Wi-Fi, rather than mobile, networks for their data, helping to lower the demand on the telco's cellular network.

The paper, which cited "people familiar with the discussions", said the two companies have already signed a letter of intent. (Deutsche Telekom wouldn't confirm or deny the story, with a spokesman for the company saying only it "doesn't participate in speculation".)

The size of the stake Deutsche Telekom is thought to be interested in is not known, nor is the price, the WSJ said.  Should the telco decide to take a stake in Fon, it would join investors including BT, Google, Skype and Sequoia Capital.

FON has around seven million hotspots in 100 countries worldwide, and partnerships in place with a number of telcos including BT, France's SFR, Belgium's Belgacom and Softbank in Japan.

The company also last week announced an agreement with the Netherlands' biggest telco, KPN. Under the deal, from the second half of this year, KPN customers will be able to roam on each other's Wi-Fi networks, and use FON customers' Wi-Fi when abroad.