O2: Is interest in T-Mobile UK designed to trigger bids?

Coming somewhat late to the party, O2 Telefonica's European chief, Matthew Key, has now admitted he would be interested in bidding for T-Mobile UK. While O2 is the first to publicly confirm its ambition, Vodafone and Orange have both been strongly linked in the recent past with acquiring Deutsche Telekom's (DT) troubled UK subsidiary.

However, by hinting at a possible bid--which would likely require the go-ahead from the UK competition authority, the European CEO could be doing little more than provoking others to officially register their interest and open discussions with DT, or remove themselves from the fray.

One possible attraction for O2 UK is T-Mobile's experience with Android and the G1 and G2 Touch handsets - O2 has yet to enter the Android market, while T-Mobile UK would hugely benefit from O2's access to the latest iPhone 3G S device. T-Mobile has been reported as buying up iPhones around Europe with the idea of offering them in the UK.

However, DT's CEO, René Obermann, has two reasons for not selling T-Mobile UK--he believes that the new UK chief executive, Richard Moat, should be given the time to resuscitate it so as to avoid a fire sale, and a sale of the UK division could throw doubt on the company's ability to remain a global player--leading to an eventual break up of the company.

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