Bidders eye Telefonica O2 following failed Hutch deal - Mobile World Live

Bidders eye Telefonica O2 following failed Hutch deal

13 MAY 2016

Telefonica chairman Jose Maria Alvarez-Pallete does not appear to be in a hurry to decide on the group’s O2 UK business, although reports claim a number of bidders are sizing it up following the rejection of CK Hutchison’s £10.5 billion bid by the EC earlier in the week.

Speaking at the company’s annual general shareholders meeting, Alvarez-Pallete said: “After receiving the decision of the regulator, we will now enter a period of reflection to decide what is the future of our business in the United Kingdom.”

In addition, he said Telefonica’s financial targets remain unchanged despite no longer receiving the expected proceeds from the sale of its UK business to Hutchison. His comments were reported by Reuters.

However, the Telefonica chief might receive expressions of interest in the UK business sooner rather than later from a number of prospective bidders.

According to the Financial Times, these might include former EE and Virgin Mobile chief Tom Alexander.

Alexander is in talks with financial institutions about a bid for O2. But he is hardly alone. Other possible bidders include private equity firms Apax, CVC Capital Partners and KKR.

Meanwhile Liberty Global, which owns Virgin Media in the UK, is also in the running, or it could be at least. The cable giant’s CEO Mike Fries said it would be “strange” if he did not consider a bid for O2 in the UK.

EU competition chief on why it’s good to cross the street
In a speech earlier today, EU commissioner Margrethe Vestager reflected on why she blocked CK Hutchison’s £10.5 billion bid for UK rival O2.

“For many years, British mobile customers who felt they were getting a raw deal from the bigger players have been able to ‘cross the street’ to Three,” she explained.

“Its prices have been much lower. And on a number of occasions, it has kept them that way even when its rivals tried to raise prices.”

But the threat that choice for consumers might be diminished was not the only reason for blocking Hutch’s bid, said Vestager.

She was also concerned about what the proposed takeover would mean for the country’s existing network sharing agreements: O2 shares with Vodafone, while Three is with EE.

“And because of those agreements, merging Three with O2 would have let it hamper its rivals’ plans to improve those shared networks, “ said Vestager.

“The new company could have made it more expensive for one rival to expand, and frustrated investments by the other,” she added.


Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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