O2 To Join Race To Acquire T-Mobile UK

UK's largest mobile network operator, O2, could possibly place a rival bid to snap T-Mobile from Vodafone and cement its lead in the UK market.

According to the Guardian, O2's parent company, Telefonica, could well be looking to join in the foray making it the third and last of the big mobile network companies to have approached T-Mobile (ed : Maybe BT should buy them).

The asking price of around £3 billion is, as the Guardian noted last week, £1 billion less than the cost of the 3G licence the company bought at the government auction run at the beginning of the millennium.

And there are other factors as well that need to be considered. T-Mobile has strong links with Hutchinson-Whampoa owned 3 Networks. Together they have created a new joint venture in December 2007 called Mobile Broadband Network Limited which oversees the network infrastructure of both companies.

T-Mobile is also a successful provider of MVNO services. Its biggest client is Virgin Mobile which brings in well above 4 million customers, which not only helps financially but also boosts the total number of customers served by T-Mobile, making it a more attractive offer.

The Guardian reports however that Virgin Mobile has a clause in its contract with T-Mobile that will allow it to move to another network if there is a change in ownership.

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Our Comments

3 Networks is the only company that hasn't been named in the race to acquire T-Mobile. Possibly as the Register said, because it doesn't have enough cash. The other way of looking at it is if T-Mobile remains in the race and deepens its strategic alliance with 3 Networks in the long run.

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