Vodafone is considering a bid to buy T-Mobile UK in a deal that would create Britain’s biggest mobile phone operator, it was reported today.
The Financial Timessaid another option under consideration involved a joint venture between Vodafone and T-Mobile UK, which is believed to have an enterprise value of between £2.5 billion and £3.4 billion.
Vodafone’s interest comes as the FT said Deutsche Telekom, T-Mobile’s owner, had appointed JP Morgan to advise on strategic options for the business after several years of under-performance. It has around 15 per cent of the UK market.
A takeover would give Vodafone a 40 per cent share and put it on collision course with regulators.
However, the FT said that the UK is the only major European market with five mobile operators, while circumstances exist in France, Italy and Spain where one operator has at least a 40 per cent share of the market.
O2, which is owned by Spain’s Telefonica, is currently the largest operator in the UK with a market share of 27 per cent. Vodafone has 25%, France Telecom’s Orange holds 22 per cent, while 3, the operator owned by Hutchison Whampoa, has 8 per cent.
Operators have complained about fierce competition in the UK, with Vodafone recently reporting a 1.1 per cent fall in UK revenues for its most recent financial year.
Vodafone’s chief executive Vittorio Colao recently said his company was willing to play an active role in consolidation between operators. The first example of this came in Australia after Vodafone and Hutchison Whampoa announced plans to combine their mobile businesses there.
PA