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Orange and even O2 may bid against Vodafone for T-Mobile UK
Published: 2 July, 2009
Tags >> UK | Telefonica O2 | Orange | T-Mobile | Vodafone
Vodafone's expected bid for T-Mobile UK may not materialize swiftly, as the company will be scrutinizing possible regulatory hurdles, but in the meantime, a bidding war could break out.
Although France Telecom's Orange has said it does not want the Deutsche Telekom unit, many insiders still believe it is preparing an offer. According to TelecomTV, Orange has been in talks with T-Mobile for some time and sees Vodafone's possible bid as a spoiler. And Telefonica O2, faced with combinations that would leapfrog its leading market share in the UK, is also expected to be mulling a bid of its own.
Vodafone has finally admitted that it has made a "preliminary approach" to Deutsche Telekom about its ailing UK arm, but while the UK-based multinational is understood to favor a direct takeover, for about €3bn, Orange or O2 might be looking at a joint venture approach, which could also please competition authorities better. An Orange/T-Mobile JV could reap synergies of €4bn to €6bn, analysts speculate, and would add to the existing RAN sharing deal between the German-owned cellco and 3 UK. A Vodafone takeover would be more complex on the network sharing front, since the larger firm already has its own RAN deal with O2.
There is also speculation that UK and EU regulators have quietly given the nod to a bid, even though the Vodafone proposal would create a cellco with more than 40% market share (a position that several incumbents hold in other European countries, but this has usually been the result of history, with previous monopoly telcos' shares gradually being eroded. By contrast, a Vodafone/T-Mobile pact would create such a dominant operator from scratch, which would be a shift in EU policy.)
