BT in early stages of negotiations to buy 02 from Telefonica

BT is in the initial stages of talks to re-acquire O2ís UK business, having flogged it off in 2001, in a deal projected to be priced at over £6bn.

The worldís oldest telecommunicationís company has stressed that there can be ìno certainty that the transaction will occurî, but has released a statement confirming that it has received pitches from two of the UKíS largest mobile networks, one of whom are Telefonica, parent company of O2, regarding its potential sale.

News leaked through to the Spanish Press that Telfonica seek a 20% stake in BT as conditional of any deal involving the sale of O2 in a ìstrategicî move, which given BTís market value of £32bn, would cause the deal to be worth roughly £6.4bn providing there are no other monetary stipulations.

Following the announcement this morning, BTís shares were up by almost 3% at a shade over 390p, as the move caused shockwaves across the stock market. This fervour has only been intensified by speculation over the identity of the second mobile operator, who Reuters earlier claimed was EE, who amalgamated Orange and T-Mobile 3 years ago.

Telefonicaís purchase of O2 in 2005 is widely regarded as the Spanish companyís defining moment given the mobile boom of the last decade, and conversely BTís greatest blunder as it missed out on all the riches that accompanied this heightened cellular phone usage.

However, Telefonicaís current focus is on reducing their debt deficit and despite its affirmation that O2 is core to its businessí longevity, Spainís biggest phone company would be willing to listen to the right kind of offers.

News of BTís prospective purchase of both O2 and EE come on the back of the British telecommunications companyís final preparations to return to the UKís mobile market in the early stages of 2015 with its own brand name. When this comes into fruition, BT will join Virgin and Sky in offering consumers media on four fronts ñ home phone, mobile, paid tv and broadband.

BTís statement in its entirety read: “We continue to develop our own plans for providing enhanced mobile services to business and consumer customers, in line with our previous announcements. We remain confident of delivering on these plans and have also been exploring ways of accelerating them, including assessing the merits of an acquisition of a mobile network operator in the UK.

“We have received expressions of interest from shareholders in two UK mobile network 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.

“A further announcement will be made if and when appropriate.”

TelefÛnica released a similarly equivocal statement to BT, with both companies holding their cards close to their chest. It said: ìTelefÛnica states that it regularly analyses the evolution of the markets in which it operates, together with the different strategic options available to (i) create value for its shareholders and (ii) reinforce its financial position.

In this context, TelefÛnica informs that although conversations with British Telecom are taking place, those are at a highly preliminary stage and there can be no certainty that any transaction may occur with such company.î

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