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Vodafone & O2 Table £3.5bn Bids for T-Mobile UK

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There is life outside IFA and Sunday certainly wasn't a day of rest for O2 and Vodafone...

According to the Sunday Times, the duo both tabled conditional offers of £3.5bn to buy the UK arm of T-Mobile, a division which owners Deutsche Telecom has admitted it is prepared to sell since May. T-Mobile UK cost Deutsche Telecom 1.8bn euros in writedowns as part of its Q1 results and it is believed to be shifting focus to its US operations.
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Despite this is it reported that Deutsche still wants closer to £4.5bn and that includes £1.2bn worth of debt. This may be out the reach of both bidders, but the chance to grab T-Mobile's 14.9 per cent market share may see the duo push the boat out. The Sunday Times quotes Enders Analysis saying currently Vodafone, O2 and Orange have 24.7 per cent, 27.7 per cent and 21.5 per cent market shares respectively. Any deal would push both companies over the 40 per cent mark, making the winner by far the country's largest telco. Rumours of a potential Orange bid could complicate things even further.

As for how virtual telco Virgin would stand if T-Mobile were sold is unclear. T-Mobile provides the infrastructure for Virgin's service, but it would likely be able to negotiate a new licence. This is because Ofcom will already be keeping a close eye on any such deal. A 40 per cent market leader would concern it, but not nearly as much as a hostile move to kill another rival.

Despite all these permutations, T-Mobile wants out so a deal one way or another seems inevitable. The stakes are high, so expect this one to rumble on for some time...

Link:
via The Sunday Times (Times Online)

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