Could Three Be About To Hijack BT’s Bid For O2?

Mike Moore,

Three’s parent company Hutchinson Whampoa allegedly planning bid for O2 or EE

BT’s plan for expansion into the consumer mobile market could be in danger of being hijacked by one of its’ largest rivals, reports have claimed.

Chinese telecommunications giant Hutchinson Whampoa, the parent company of UK mobile operator Three, is planning a bid for either EE or O2, the companies courted by BT, according to sources close to the matter.

Hutchison has yet to comment on the story.

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The private talks are reportedly under way at the moment, but O2, as the larger company, is thought to be the more attractive proposition for both Hutchinson and BT. However, a deal with EE, the UK’s largest mobile operator, could work out better for Hutchison, especially as the companies already have a network sharing agreement deal in the UK, the sources said.

BT confirmed last week that it was in talks with O2’s parent company Telefonica regarding a possible sale of the operator as it looks to launch consumer mobile services sometime next year. Such a deal would mark a significant volte-face for BT, which span off originally sold off O2 (which was formerly known as BT Cellnet) for £17.7 billion in 2005.

BT currently provides backhaul services to O2 but overlooked the operator as a potential MVNO partner, instead opting for EE as part of its plans to launch consumer mobile services from early next year.

It is unclear how any takeover would impact the latter deal, especially as EE, formed as a joint venture between Orange and T-Mobile, confirmed earlier this week that it was discussing a possible sale with BT.

Three, which is the UK’s fourth largest mobile operator behind O2, EE and Vodafone, has enjoyed significant growth this year. In its half yearly results, the company announced operating profits of £123 million, with the operator seeing growth in both the number of customers and the amount of data being used.

The company also recently signed a deal with Carphone Warehouse which looks to launch a Mobile Virtual Network Operator (MVNO) using Three’s infrastructure. It is understood that Three has been strengthened by the 800MHz spectrum it acquired in the Ofcom 4G auction last year and could be open to more MVNO agreements.

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