BT Confirms O2 Takeover Talks

BT has confirmed it is in talks to buy O2 following reports in Spain that Telefonica was prepared to sell its UK subsidiary if the British fixed and mobile communications markets continued to merge.

The company, which sold O2 for £17.7 billion in 2005, is currently undergoing a major mobile push and plans to launch consumer mobile services next year using a combination of its nationwide Wi-Fi network and a Mobile Virtual Network Operator (MVNO) powered by EE’s infrastructure.

However it appears ready to go one step further with this plan and told TechWeekEurope it had opened negotiations with O2 and another unnamed mobile operator.

BT O2 sale

“We continue to develop our own plans for providing enhanced mobile services to business and consumer customers, in line with our previous announcements,” said a spokesperson. “We remain confident of delivering on these plans and have also been exploring ways of accelerating them, including assessing the merits of an acquisition of a mobile network operator in the UK.

“We have received expressions of interest from shareholders in two UK mobile network operators, of which one is O2, about a possible transaction in which BT would acquire their UK mobile business. All discussions are at a highly preliminary stage and there can be no certainty that any transaction will occur.”

O2 currently has 24.31 million mobile customers in the UK but appears unwilling to follow rivals EE and Vodafone into the fixed line market, with both employing a ‘quad play’ strategy of offering mobile, broadband, landline and television services in a single package to better compete with BT, Virgin Media, TalkTalk and Sky.

BT currently provides backhaul services to O2 but overlooked the operator as a potential MVNO partner, instead opting for EE. It is unclear how any takeover would impact the latter deal although it is entirely possible that EE is the other company that BT has entered into talks with.

EE’s parent companies Deutsche Telekom and France Telecom have long been believed to open to the idea of a sale of the company, with US operator AT&T frequently touted as a potential suitor.

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