[3GScottishUser]

From Times On-Line (23/08/2006):

Back in London, Vodafone dropped as much as 1.75p to 108.75p, its lowest reading since March 2003, only to rally towards the close and finish unchanged at 110.5p. The swing came amid suggestions that the mobile operator could consider buying the UK unit of 3, the rival network owned by Hong Kong-based Hutchison Whampoa.

Hutchison, which reports figures tomorrow, is widely expected to look at disposing 3 UK next year, with a valuation in excess of £8 billion. But plans to float the business have been put on hold after the IPO of its sister company in Italy failed to attract a valuation that matched Hutchison's expectations.

According to sector watchers, Hutchison could bring forward its disposal timetable if trading deteriorates and valuations start to slide. News on that could arrive as early as tomorrow: analysts expect the firm's UK unit to have add just 400,000 customers net over the last six months, with churn increasing as other operators matched its price tariffs and patchy network coverage encouraged defection.

"The slowdown in 3UK subscriber growth risks leaving the operation sub-scale and unable to IPO at book value," said Credit Suisse in a morning note. "A sale of the operation, potentially to one of the existing UK operators, would potentially realise more value."

There is no obvious trade buyer for 3 UK among the UK operators, with Telefonica (O2) France Telecom (Orange) and Deutsche Telekom (T-Mobile) all working under tight financial constraints. That leaves Vodafone, whose chairman John Bond knows Hutchison owner Li Ka-Shing well from his time in charge of HSBC.

"Consolidating markets would be one way for Vodafone to improve the outlook for its European operations," continued Credit Suisse. "Regulatory approval would be a challenge, but not insurmountable given the fragmented nature of the UK market."

http://business.timesonline.co.uk/article/0,,8211-2325180,00.html

[Hands0n]

..... chairman John Bond knows Hutchison owner Li Ka-Shing well from his time in charge of HSBC.



That association should not be ignored, it is highly significant. If Sir John thinks that Voda's position will be improved by acquiring 3, and his mate is selling it, then expect an acquisition announcement in not very long from now! The Chinese ties between HSBC execs are still very strong, there is much history in those relationships, and loyalties are honoured generally.

[3g-g]

Nah, can't see it. Voda then need to get rid of H3G's licence to someone else, and who wants to start a whole new network in the UK when the operators are currently trying to squeeze every penny out of their 15 million or so customers each? £8Bn quid for 3 million Three customers? Not worth it in the slightest, Vodafone would then have all the hassle of integrating all of 3's equipment into their network or have to sell it off to whoever came into replace Three...

[3GScottishUser]

I am also sceptical about Vodafone buying 3's UK operation. Why would they want such a milstone when they have their work cut out migrating their own customers to 3G.

I still think BT, NTL/Virgin or Carphone Warehous Plc could be ideal suiters if the price reflects the true value of the company.

All things considered I expect HWL to dispose of 3 UK sooner rather than later as the latest results (posted in a separate thread) appear to indicate that market conditions in the UK are far from ideal and must be a significant strain on the overall profitability of the group.

[getti]

I have heard the name Telefonica thrown in but dont think they can as they already own O2

[3GScottishUser]

Don't rule out any of the existing networks acquiring 3 as Ofcom have a policy of allowing mergers where competition is unaffected.

It appears that the UK mobile market is struggling to support 5 networks and Ofcom will take account of this if/when any approach is made. A look at the consolodation in the TV and Radio industries should provide a clue as to what might happen.

Never say never!!

[hecatae]

I have heard the name Telefonica thrown in but dont think they can as they already own O2


They've had hardware problems rolling out 3G so it would solve a costly operation of replacing all their faulty hardware if they could just buy it.

[bsrjl1]

O2 are currently replacing their Nortel 3G kit with Nokia, so a bit late!

If VF did buy 3 then the combined network would have 6 channels, half of the UMTS spectrum allocation. I'd guess they'd have to split like they did GSM1800 when US West were purchased by C&W to form one2one?

[Ben]

*drool's at the prospect of better 3G coverage on Vodafone*

Any existing UK operator acquiring 3 UK has far too many implications for my tiny brain to manage at this hour, but if anyone can do something with Three then surely Vodafone is one of the few.

[miffed]

If this were to happen Vodafone woud have the monopoly on crap customer service :eek:

Can you IMAGINE how bad it would be ? .... *shudder* :(