A raft of company names have been put forward as potential bidders for the ailing Deutsche Telekom (DT) subsidiary, T-Mobile UK. The list ranges from existing UK telecoms operators, MVNOs, TV broadcasters to potential "dark horses" from the Middle East or even China.
This somewhat wild speculation is based on reports that DT wants to be rid of the troublesome UK operation--having seen its revenues plummet by over 20 per cent and a three per cent fall in recorded subscriber numbers. DT is also under growing pressure from another large shareholder, US private equity firm Blackstone, to resolve the problem speedily and use any proceeds to aid further expansion in Eastern Europe.
However, analysts are pricing T-Mobile UK at a hefty £3.2 billion, which could rule out a merger with 3UK given that its parent, Hutchison, might lack the available cash and has previously stated that it wants to sell its cellular interests.
While Vodafone and O2 have been named as potential bidders, the almost certain hostility from the UK competition authorities could make them wary, and France Telecom Orange might stand a better chance. The suggestion that Carphone Warehouse and BSkyB--the TV and broadband player--are circling T-Mobile UK is interesting but the price could be too strong, while BT could be a better gamble, albeit that it is presently mired in financial problems of its own making.
The dark horse option is even more clouded. Could we see Orascom or China Mobile make a daring raid into the heart of the European cell phone market? Both have hinted they are looking for expansion and would consider acquisitions, but would they want to enter such a saturated and highly competitive market?
Altogether a tricky call, and one that will require a firm conviction from any bidder that they can make T-Mobile UK a profitable operation in a period of extreme financial uncertainty.
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