[3GScottishUser]

From thebusinessonline (02/09/2005):

UK-based mobile operator O2, formerly BT Cellnet, is in a position to bid for a rival operator such as Germany’s E-Plus or Hutchison Whampoa’s 3, according to City analysts. After the collapse of talks between Germany’s Deutsche Telekom and Netherlands-based operator KPN for a joint takeover of O2, the former target is seen as a potential predator.

Given the strength of O2’s German operation, a German acquisition such as KPN’s E-Plus is seen as likely. Citigroup’s telecoms analysts say: “In Germany the logic in offering to buy

E-Plus needs no explanation. The current price – maybe £10bn (E14.6bn, $17.9bn) based on recent transactions – would have to stretch in 2006 to reflect tax losses available only to Netherlands-based KPN.”

According to Citigroup, O2’s slowness in building out its 3G network in the UK could also lead it to consider a merger with Hutchison Whampoa-owned mobile operator 3, which has a 3G network covering 82% of the population. Citigroup adds that there could still be fresh bidders circling O2, such as France Telecom. An O2 source told The Business the company is not currently engaged in takeover talks.

http://www.thebusinessonline.com/Stories.aspx?StoryID=F67EBE09-87D0-450E-85B6-A472E53C41B8&SectionID=F3B76EF0-7991-4389-B72E-D07EB5AA1CEE

[@NickyColman]

As much as i think it would be great and ideal if O2 took over 3, i just cant see it happening! I dont think O2 are simply big enough or strong enough.

If they did however merge, i would like the O2 brand image to continue, altho the makers of the Three brand my not be so happy after a 2 year shelf life :)

[3GScottishUser]

I wonder if 5 networks are just too many for the UK? It has been suggested that 4 more than creates sufficient competition and with MVNO's in addition there is a theroy that none of them can make long term profits unless some shakeout happens.

I'll be interesting to see what transpires.

[frazzel]

Well I would like the o2 customer service part as in english speaking english based service!

Secondly not knocking o2 but their 3g network is so small and with 3 gaining momentum I would think o2 would like to have a 3g network of that size to play with to enhance on their current services. .IE IMODE ETC.

So if o2 became 02+1=3 lol joking then maybe they could gain a few customers and a large 3g network at a fraction of the cost.

[3GScottishUser]

Very very possible..... down to the regulator in the end. It makes sense that an existing network could make something of it far more easily than another new entrant.

I suspect OFCOM would take back 02's UMTS licience and offer it for auction again. Perhaps BT, Tele-2, KPN or Telefonica might be able to make something of it given a bit of extra time to expand it. I'm not sure 02 are now dragging their feet with UMTS, there is a lot more blue on their coverage map than there used to be.

[Ben]

I'm not sure how this is going to affect O2's HSDPA rollout.

O2 have so far tried to convince us that all their kit will be HSDPA ready. However, Hutchison's Three certainly isn't HSDPA read - they started building their network far too early for that to be the case.

They're going to have a lot of work on their hands to bring the infrastructure up to scratch. I think I'd rather O2 went back to BT and benefitted from investment that way rather than going shopping for what they lack.

[3SellerNW]

Hi all

I think IF there is any sort of takeover, I would reckon that 3 will buy O2, not the other way around.

[3GScottishUser]

I doubt it.

02 look spoken for. They look like being acquired by either T-Mobile or Telefonica. Either of those would make a good stable parent for what is now the biggest mobile operator in the UK. (They have just overtaken Orange for customer numbers).

[Ben]

You can't deny though that it'd be a nice tie-up - especially with i-mode now on O2. Hutchisons buying power definitely wouldn't put them out of the picture, but I agree T-Mobile and Telefonica are the more likely candidates. Could you imagine if we went back to 4 players again in the UK? I think it'd be somewhat of a shame :(

[3SellerNW]

You can't deny though that it'd be a nice tie-up - especially with i-mode now on O2. Hutchisons buying power definitely wouldn't put them out of the picture, but I agree T-Mobile and Telefonica are the more likely candidates. Could you imagine if we went back to 4 players again in the UK? I think it'd be somewhat of a shame :(

Then again, I have no time for 02 - 40p a minute xnet charges - the dearest in the UK!

Come on Hutchison - buy O2!!!!

[3GScottishUser]

Hutchison's strength has traditionally been in building new companies and have not really done that much in the way of acquisition to expand. I doubt if their policy will change and the signs are that they are now looking to divest from big telecoms holdings by spinning them off (ie 3 Italy IPO).

I would be more comfortable with a European operator taking 02 over, Telefonica would make a nice fit and would'nt involve any competition issues.

[3g-g]

None of the UK operators will buy either O2 or Hutchison, it's just not allowed. When Vodafone aquired Manesman, who at that point owned Orange they were in breech of UK licencing regulations and they had to sell Orange quick smart.

If one of the exsisting ops aquired either O2 or Hutch, they'd either have to sell them on again or sell their own licence.

If anything is for sale then it'll have to be an operator from outside the UK market place that comes in, and in all honesty with Vodafone and Orange having their fingers in most of the pies it doesn't leave many!

Possibly a DoCoMo for O2... or maybe KPN?

[frazzel]

If DOcoMoco took 02 over I would jump to them as they seem to come across a very strong company with great phone knowledge! Well my opion anyway!

What could KPN offer us then?

[@NickyColman]

I think a bit of Japanese influence in the UK market would be great! O2 would be able to take advantage of new advances in the Japanese market and set the new trends!

[3GScottishUser]

It is becoming more and more transparent that there just is'nt enough room for 5 separate networks and all the MVNO activity we now have in the UK. Consolodation is very likely and part of the process will be the acquisition of 02 by a bigger multi-national. Telefonica or T-Mobile look set to make a move and depending on who gets the prize we will see what happens to 3 UK. If T-Mobile end up with 02 they will have 29 million UK customers and will reign supreme with storng competition from Orange and Vodafone, 3 will remain a sideshow and will eventually be consumed by an aspiring MVNO or a secondary player like Tele-2 who might be able to make something of the runt once the baggage of '3' has been discarded.

The UK mobile telecoms business looks to be heading for a 'settling' period after 3 years of intense turmoil that has'nt really affected any of the big players to any significant extent.

[@NickyColman]

Would -T-Mobile be able to takeover O2 or would that be against the competition laws? Surely that would make -T-Mobile enormous! It would surely cripple the market with one huge player!


In regards to the mvno's, i really wouldnt mind if they were all swallowed up by the 5 networks.

Would it be possible for Three to buy a load of mvno's to increase its market share?

[Hands0n]

Just to throw a different sized spanner in the works ...... I'd argue to the contrary.

I remember similar arguments about ISPs and how there would only be one or two after the shakeout (BT even believed that they'd be "it"). Well that never happened, and we've never had quite so much choice of ISP. For sure, mergers and acquisitions abound, but (like MVNO activity i.e. easyMobile ) new entities pop up to fill in the gaps left behind.

I know we're talking about very different technologies, but why not 5 main network operators and dozens of MVNOs? Even "affinity" MVNOs in the future (i.e. Saga)?

I do believe that there is scope for even more than the 5 primary network operators we have today, but with the cost of the licenses the chances of numbers 6 and 7 coming along are slim to nil. But for the incumbent 5 to make more from their investments then the MVNO way would seem [to me] to be the direction to head in. All the while building on their own strengths and brand - which, it cannot be escaped, 3 are very good at the latter (even if we don't truly understand their advertisements).

The consumer will define how many mobile ops/MVNOs are viable. Much will depend on presence. It cannot be escaped that all five of the operators have a strong presence. As does the Virgin MVNO. As for many of the others, well they may have a job on their hands to strike a chord with the buying public. Noone I know that I've spoken to had heard of easyMobile or Fresh.

I'm not inclined to agree about any "settling period" ........ the battle has only just started. The magic app has not yet been found for 3G. There will, for sure, be much activity and much junk and crud to wade through. Equally, there is likely to be something for everyone.

[@NickyColman]

I agree hands0n, i think its very much a case of the battle has just begun.

We have the Christmas period fight on our hands. . . and thats just the short term!

We still have a while to go before all the networks are 100% 3G, so between then and now we are going to have the networks pulling out all the stops to get people taken into 3G, new deals, new handsets, new gimmicks are all gonna be lanched.


I think we are far from a settling period for the market!

[3g-g]

...Telefonica or T-Mobile look set to make a move and depending on who gets the prize we will see what happens to 3 UK. If T-Mobile end up with 02 they will have 29 million UK customers and will reign supreme with storng competition from Orange and Vodafone...

The only thing is that it can't happen. T-Mobile would not be allowed to enter into the purchase of another operator while they ran their own licence in the UK. If they made a move for O2 they'd either have to sell their own licence or punt the O2 one, either way they only end up with one. I very much doubt you can buy a telco, move 12 million subs within 30 days or so that you have to sell again to your prefered operator, which ever one you decide to keep, then sell the other licence with no subscribers making it completely worthless?! It's happened before with Orange and Vodafone so it's pretty clear that it's not even a possibility here. If anyone is for sale, and at a guess I can only see it being O2, the buyer is going to have to be someone with no operator interest currently in the UK

[3GScottishUser]

I would'nt say 'can't', sadly goalposts can move and T-Mobile seem ore concerned with issues of regulation in Germany than they do in the UK. Most markets have four compeditor networks, the UK has five and the growth of MVNO's and what we have seen in terms of the difficulties 3 has had in securing a foothold may have changed opinions with regard to the above.

Never say never. One look at commercial TV and radio in terms of consolodation lately might provide a clue in terms of OFCOM's policy.

We shall see.

[frazzel]

What about Virgin?

They could dump their mnvo with t mobile and take o2?

Just a thought?

But hey I would be happy for 02 to aquire 3uk ;) I want my english customer service back he he!

[3GScottishUser]

Doubt if Virgin would want to part with £13,500,000,000 to take over 02. They are doing rather nicely with 4 million customers on a network they don't have to maintain and operate.

02 aquirie 3? Nope - why would they? They have 3G already and are attracting customers at 3 times the rate 3 UK do presently. Doubt if that would be a runner.

[3GScottishUser]

9 Months on things have changed and some predictions here have come to fruition.

02 has been acquired by Telefonica and CEO Peter Erskine has defied all the odds by growing the business like crazy. They are about to challenge BT, their original parent on Broadband territory too.

Mr Erskine is confident that neither his company or Vodafone UK have anything to gain by paying to acquire another UK wireless operator. I believe he is right and consolodation will now be between the renaining 3 wireless players or alternative telcos or entertainment business companies like BT or BSkyB.

Another 9 months will bring some more very significant changes.

[Hands0n]

The business model will largely be defined by the buying Customer. Much is being staked on convergence by the operators, media organisations and other organisations. This is new territory for all of them, each specialists in their own area of operation, none master of all. Will the parent of the converged [by acquisition] organisation truly know how to run such a business? Will the Customer buy into this "all from a single source" proposition? Time alone will tell.

For sure, there will be a continuing number of mergers and acquisitions. Some will not be so welcome, others may well be so. I'm thinking at the moment of Orange and the changes that have occurred there since FT bought them out. Have these been for the better? One has to wonder as one looks around their menagerie of a tariff offering. Can we anticipate more of the same when proffering Convergence to us?

Three seem to have weathered the marketplace so far. Whether or not they can continue to do so is anyone's guess. They have, nevertheless, led in some rather key areas, coming up from the back and all of a sudden being heralded as the UK's number one mobile content provider. These public accolades become noticed by the public at large, featuring in many prominent media sources. All good "free" advertising for Three, and deservedly so even if the means are somewhat questionable [statistically].

Who can, or would, attempt to buy out Three? It is unlikely to be a UK organisation. More likely, if at all, a large international media organisation. But whoever it is, they will have to come up with a significant amount of cash. Three won't be a cheap deal at all. But it is very likely that they will be snapped up, at least in the UK where they have a very viable delivery offering (everywhere except certain parts of Scotland :p ).

[3g-g]

Three seem to have weathered the marketplace so far. Whether or not they can continue to do so is anyone's guess. They have, nevertheless, led in some rather key areas, coming up from the back and all of a sudden being heralded as the UK's number one mobile content provider. These public accolades become noticed by the public at large, featuring in many prominent media sources. All good "free" advertising for Three, and deservedly so even if the means are somewhat questionable [statistically].

Who can, or would, attempt to buy out Three? It is unlikely to be a UK organisation. More likely, if at all, a large international media organisation. But whoever it is, they will have to come up with a significant amount of cash. Three won't be a cheap deal at all. But it is very likely that they will be snapped up, at least in the UK where they have a very viable delivery offering (everywhere except certain parts of Scotland :p ).

Just thinking about what we've discussed on and off for a while now. I personally think we're still quite a while away from seeing Three being sold by HWL, I know they're getting a bit of grief all around the world for being generally "poor" in a number of areas, but I just can't see them giving up so quickly, they've only been here 3 years. If the world of personal communications does become blurred and converged quickly I don't think it'll be an exsisting telco that takes over 3, IMO one of the large ISPs will move into the cellular world, think along the lines of AOL.