BT confirmed it is in acquisition talks with two UK operators, one of which is O2, following a media report that Telefonica was willing to offload its UK unit in exchange for a 20 per cent stake in the UK fixed incumbent.
The second operator attracting the interest of BT is thought to be EE.
In a statement, BT said it had received expressions of interest from the shareholders of two mobile operators in the UK, one of which is O2, about acquiring their businesses.
However, it cautioned discussions are at a preliminary stage and their outcome is uncertain.
El Confidencial said Telefonica is exploring a strategic alliance with BT to block any moves by US operators, including AT&T, to enter the European market. “Telefonica is exploring a strategic alliance with BT to create a European giant,” it said.
Such a move would shore up Telefonica’s UK strategy in the face of rising fixed-mobile competition.
Jose Maria Alvarez Pallete, Telefonica’s COO, said last week the group was keeping its options, including a sale of O2, open in response to the aggressive fixed-mobile strategies of rivals EE and Vodafone, as well as the re-entry of BT into the mobile market.
Indeed, creating a powerful, integrated player in the UK would turn up the heat on rivals, particularly smaller carrier Three.
“Buying O2 would give BT a terrific set of assets to deploy a quadplay strategy, including a dominant presence on the UK high-street,” noted CCS Insight analyst Kester Mann in a tweet.
BT is also thought to be in talks about a possible acquisition with EE, the UK’s largest operator with which it has an MVNO agreement.
BT’s quadplay push
The UK fixed incumbent has its own spectrum and a significant network of Wi-Fi hotspots. It is expected to launch a mobile service over the next few months. That prospect seems to have spooked existing mobile operators.
There is speculation that BT is developing its own quadplay strategy, bundling mobile with broadband, phone services and BT Vision (BT has spent generously on TV rights for English Premier League football and other sporting events in an attempt to lure subscribers).
BT’s statement did not mention quadplay but did talk about its return to the mobile market. Ironically, its last serious involvement in the consumer market ended with a spin off of O2 more than a decade ago.
“We continue to develop our own plans for providing enhanced mobile services to business and consumer customers, in line with our previous announcements. 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,” said BT’s statement.