Monday, October 31, 2005

Mon - Telefonica bids for the UK's O2

Telefonica has just announced a $31.5bn acquisition of the UK's O2. O2 was itself spun out from the UK's British Telecom. It was their mobile phone unit, with ooperations today in the UK, Germany and Ireland.

This is a major move by Telefonica, which is now the 3rd most valuable telco on the planet. But, their bid may flush out a competing offer from Deutsche Telekom. All the same Telefonica would have far less regulatory issues as they don't really have businesses in the UK or Germany.

This is yet another major move in the rapidly accellerating consolidation of the European telco market. It looks like a big five group of truly pan-European operators is emerging that could force considerable change in the Euro telco market. They include Vodafone, Deutsche Telekom, France Telecom, Telecom Italia and Telefonica. It will be interesting to see what moves Telecom Italia makes as they are now lagging the group in European presence.

O2's management team must be applauded for creating such a valuable target in a reasonably short period of time. I wonder what will happen to the O2 brand? If I was Telefonica I would hang on to it hard.

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