Companies named as BT targets
Telefónica O2 unit and Orange- and Deutsche Telekom-owned EE targeted
BT said it was in preliminary talks for two companies and identified only Telefónica-owned O2 as a target. Photograph: Martin Divisek/Bloomberg
BT Group plc is in talks to buy Telefónica SA’s O2 unit or another mobile phone company to expand its wireless offering in the UK and complement its broadband network, the largest in the country.
BT said it was in preliminary talks for two companies and only identified O2 as a target. EE and O2 are each valued at more than $15 billion (€12.06 billion) by Macquarie Group. BT would probably offer a stake in itself to fund the deal, another source said. Either company would give BT the customer base and network of one of the top three UK wireless providers. It would strengthen BT’s position as companies in the market move toward selling bundles of TV, internet and phone services.
A deal would make BT the largest phone carrier in the UK. that can offer both wireless and fixed-line services without having to rent network capacity from someone else.
“You need infrastructure,” said Guy Peddy, an analyst at Macquarie in London.
Buying access to other networks isn’t “sustainable in the long term”, he said.
Deutsche Telekom gained 1 per cent to €13.29 in Frankfurt and Orange increased 1 per cent to $13.84 in Paris.
The discussions are at a “highly preliminary stage and there can be no certainty that any transaction will occur”, BT said today.
Representatives for Telefónica, Deutsche Telekom and EE declined to comment.
An Orange representative couldn’t immediately be reached for comment.
EE’s shareholders have revived talks to sell the company, which may be valued at as much as $19 billion. – (Bloomberg)