Vodafone To Acquire T-Mobile For £3.4 Billion?

UK's largest mobile phone network by revenue, Vodafone, is looking to acquire the loss-making UK operations of T-Mobile for a cool £3.4 billion.

The Financial Times newspaper, citing people close to the negotiations, said that the move would give Vodafone a 40 percent market share in terms of revenue paid, far ahead of Telefonica-owned O2 and FranceTelecom-owned Orange with 27 percent and 22 percent respectively.

Vodafone would grow to more than 35 million subscribers, a figure which would give it control on half of the UK mobile market in terms of customers. The possible acquisition could also squeeze out completely 3 Networks as well as other MVNO's like Virgin Mobile as T-Mobile has a number of partnerships.

However, it is likely that Ofcom, the telecoms regulator, blocks the deal as Vodafone would be getting a portion of the market which would make it too large for the good of the competitive landscape.

T-Mobile has written down £1.6 billion off its mobile operations at the beginning of May 2009 while O2 and Vodafone saw profits margins of more than 25 percent. T-Mobile has also announced a 2.6 percent fall in customer numbers, reaching 16.7 million.

Deutsche Telekom had appointed JPMorgan to evaluate the various options available to maximise a potential exit from the UK market or in market terms, "seeking advise on strategic options". Vodafone and T-Mobile declined to comment on the rumours.

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