The BT Group is currently deciding whether to buy back O2, 13 years after splitting from them, or potentially buy their rival EE as they plan to re-enter the mobile market.
After BT confirmed discussions yesterday, this new deal could offer a highly potent combination of services. However the company has already secured a deal with EE to use its network to become a mobile virtual network operator, but acquiring its own network would give BT a far more comprehensive offering.
Purchasing a mobile operator would enable BT to accelerate their mobile strategy and will see foreign owners of the mobile networks taking a 20% stake in return for their UK arms.
BT’s shares have recently jumped by 3.7%.
“This would allow BT to offer a quad-play bundle (TV, telephone, broadband and mobile) using their own network in a market rapidly moving to convergence, BT to generate operating expense savings from ownership of the mobile network and BT’s Sports investments could be streamed across a larger subscriber base,” said Bank of America analyst David Wright.
If BT takes over O2, the telecom group could be valued at around £10bn.
“In the event that a deal materialises, it would likely force Vodafone, Sky, TalkTalk etc into accelerating their bundle strategies,” said analyst Sunil Patel at Bank of America Merrill Lynch. “This could lead to more deals or partnerships.”
“We have received expressions of interest from shareholders in two UK mobile network operators, of which one is O2, about a possible transaction in which BT would acquire their UK mobile business. All discussions are at a highly preliminary stage and there can be no certainty that any transaction will occur.”