BT ponders £10 billion reunion with O2

02 Millennium DomeBT looks poised to re-enter the mobile phone market quicker than expected after receiving approaches from two firms keen to do a deal.

Reports from Spain say Telefonica wants to sell O2 in exchange for a 20% stake in the business, while EE is also said to have approached BT which has indicated that it wants to be back in mobile by next March.

Acquiring an established business – particularly one of the majors – would accelerate its plans and allow it to pitch directly against Vodafone.

The move comes after BT launched BT Sport and is a further signal of its intention to retain a place at the top table of global communications businesses.

In a statement to the stock market today it said:  “We have received expressions of interest from shareholders in two UK mobile phone 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.”

If it acquires O2 BT would effectively be buying back a business it launched in 1985 as Cellnet, a joint venture with Securicor whose 40% it acquired in 1999. It renamed the business BT Cellnet, later renamed in O2, and then sold it to Telefonica in 2005 for almost £18bn.

At a stroke it helped ease BT’s debt burden, but it left the company exposed at at time when mobile telephony was in rapid expansion and fixed lines were fading.

O2 sponsored the Millennium Dome in London in 2007 and has been a big supporter of sport and music concerts.

EE’s joint shareholders, France Telecom and Deutsche Telekom, have been considering a £10 billion stock market listing but a trade sale would be quicker and more simple.


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