Telefonica plots to partner O2 UK


British arm of Telefonica to be partnered off in bid to boost business

Spanish operator, Telefonica, is looking for a partner for its British arm as it attempts to increase the size of the business in light of rival EE’s success in winning the attention of BT over O2 last month.

BT was in talks with both O2 and EE as the pair of mobile operators competed to sell their businesses to the former UK incumbent, but the largest UK mobile operator, EE, won and is now the object of a £12.5 billion takeover bid by BT. The deal will give BT and EE a major position in the UK in both mobile and fixed line broadband for packages combining mobile comms, TV, broadband and fixed line telephony.

As other UK mobile operators have diversified into broadband and TV, O2, which is the second largest UK mobile operator, has remained a mobile-only business, a fact it is now attempting to change. Looking at options within the business are Hutchinson Whampoa’s Three, which has remained on the fringe of UK mobile competition. This deal could take the form of a buyout or a merger according to people close to the situation, as reported on Bloomberg.

If O2 merged with Three the pair would become the largest mobile operator in the UK with over 31 million subscribers, taking around 41% of the market and also controlling the broadest range of mobile spectrum out of the mobile operators in the UK, according to the FT.

Additionally, UK pay TV provider, Sky is now reported to be in talks with Telefonica about its UK mobile network, said Bloomberg.

More on this story to follow.


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