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Telefonica O2 Interesting in Buying T-Mobile UK

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Telefonica's O2 subsidiary would be interested in putting in a bid for T Mobile UK if its parent company, Deutsche Telekom decides to put it up for sale. In an interview with Financial Times Deutschland, Telefonica's European CEO, Matthew Key said that any acquisition would be likely to require an investigation by the UK's regulators as the merged company would have a market share in excess of 40%.

The only likely candidate which could get past the UK's regulators is Hutchison 3G UK, which is the smallest of the UK operators. There have been persistent, if always denied rumours that Hutchison 3G UK could be put up for sale by its owner Hutchison Whampoa.

Speculation that T-Mobile UK is up for sale have been rampant ever since Deutsche Telekom wrote down the value of the company by EUR 1.8 billion (US$2.4 billion) a few months ago, giving it a book value of around USD5.3 billion. The German company's management, however, believe new UK chief executive Richard Moat should be given the time to resuscitate it, so as to avoid a fire sale.

René Obermann, Deutsche Telekom's chief executive is also thought to be concerned that a sale of the UK division could throw doubt on the company's ability to remain a global player - leading to an eventual break up of the company.

Respective Market Shares After T-Mobile Merger

  Current Subscriber Base Current Market Share Merged Subscriber Base Merged Market Share
Hutchison 3G 4,430,470 5.69% 21,105,470 27.11%
O2 21,594,500 27.74% 38,269,500 49.16%
Orange 16,435,000 21.11% 33,110,000 42.53%
Vodafone 18,716,000 24.04% 35,391,000 45.46%
T-Mobile 16,675,000 21.42% - -

Data sourced from The Mobile World database based on Q1 subscriber numbers

Last month, it was reported that Vodafone had offered to do a swap with Deutsche Telekom for its Turkish subsidiary, although the deal was denied by Vodafone. France Telecom has also been rumoured to have made an offer to buy T-Mobile UK, but was rebuffed by Deutsche Telekom.

On the web: Financial Times Deutschland

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Tags: telefonica  o2 uk  t-mobile uk  deutsche telekom  telekom  UK