Vodafone Reported to Be Considering Bid for T-Mobile UK

Mor­e rumours about the future of T-Mobile UK emerged today in The Times newspaper with a report that Vodafone is considering making an offer to buy the company. T-Mobile and Vodafone declined to comment last night. However, one source close to the situation told The Times that Vodafone was examining its options.

Last month, it was rumoured that France Telecom's Orange has put in a bid for the company, although this was later denied.

T-Mobile's parent company, Deutsche Telekom is understood to have been coming under pressure to sell the UK arm of T-Mobile due to ongoing poor performance at the mobile network. The German company's management, however, believe new UK chief executive Richard Moat should be given the time to resuscitate it, so as to avoid a fire sale.

In it's quarterly results, Deutsche Telekom wrote down by EUR 1.8 billion (US$2.4 billion) the valuation of T-Mobile UK - giving it a book value of around US$5.3 billion.

Based on figures from the Mobile World analysts, a merged Vodafone/T-Mobile UK would have a subscriber base of around 35.4 million, and a market share of 43%

Another spanner in the works of a takeover could be the potential US$900 million lawsuit liability faced by T-Mobile UK. The company is currently being sued by now-bankrupt GSM gateway operator, VIP Communications.

One slightly unexpected side-effect of an acquisition by Vodafone could be a huge consolidation in the network infrastructure side of the business. T-Mobile UK is already in a 3G tower sharing deal with Hutchison 3G UK, which aims to reduce their combined assets by around 5,000 towers. Vodafone is already in a network RAN sharing deal with Orange, and has been reported to be talking to O2 about a similar arrangement.

A post merger shake up of the various network sharing deals could potentially lead to a couple of tower/network infrastructure operators being created who then wholesale their services to the phone companies. Similar deals have emerged in other countries, such as the 3G Infrastructure Services venture in Sweden.

On the web: The Times - Mobile World

Posted to the site on 29th June 2009