O2 CEO says deal with Three ‘least likely’ scenario amid chatter of further UK mobile operator consolidation following BT/EE talks
News of BT Group’s exclusive talks to acquire the UK mobile network operator EE has prompted speculation regarding further consolidation in the sector, The Daily Telegraph reported. The newspaper said O2 chief executive Ronan Dunne has described suggestions of a tie-up with rival UK network operator Three as the “least likely” scenario in the event of further consolidation. Dunne said O2’s mast sharing arrangement with Vodafone would be a considerable obstacle, the item added.
Dunne was quoted at the end of an article about BT’s proposed GBP 12.5bn (EUR 15.7bn) acquisition of EE. BT had been in talks both with EE’s owners, Orange and Deutsche Telekom and with Telefonica regarding a potential alternative deal to acquire the Spanish telecoms group’s UK subsidiary O2.
The item noted suggestions that Three, a subsidiary of the Hong Kong-based conglomerate Hutchison Whampoa, could make an offer for whichever of EE and O2 that BT does not buy.
It is thought that Three is keen to acquire any radio spectrum to be divested as a result of any regulatory intervention, the report added.
A Financial Times report noted analysts’ speculation that Telefonica could be interested in a deal with Hutchison Whampoa. The report suggested Talk Talk, a UK-based fixed line telecoms and pay TV operator, as an alternative bid target for Telefonica, as such a deal would allow the merged group to offer the “quad-play” package of fixed line, mobile, broadband internet and pay TV.
Separately, the Financial Times item said the FTSE-100 mobile operator Vodafone might consider a tie-up with Sky (formerly BSkyB), a listed UK-based satellite television group. Sky might itself consider buying O2, the report suggested.
Another report in the Financial Times said regulators would find it difficult to argue that the proposed acquisition of EE would give BT too much dominance. BT would will not increase its market share in one sector, but the regulator might consider whether the deal might allow BT to cross-subsidise parts of its business to the disadvantage of its rivals, the item argued.
Daily Telegraph, Financial Times