A potential bidding war for cellphone operator T-Mobile was in prospect yesterday after reports said O owner Telefonica was eyeing the business.
The Spanish company’s interest in T-Mobile would throw down the gauntlet to mobile phone giant Vodafone, which is also said to be weighing up a possible bid.
Telefonica is thought to be concerned that O2 would lose its market-leading position in the UK if Vodafone goes ahead with an offer.
Telefonica, which was unavailable for comment, has 27% of the UK market through O2.
Vodafone is the second largest player with 25% but this would be bumped up to 40% if it bought T-Mobile, the UK’s fourth biggest mobile phone operator.
Sources close to Telefonica said that the company had not made a decision about whether to go ahead and preparation was at an early stage.
T-Mobile is owned by Deutsche Telekom and valued at about £3billion by analysts. The German company is said to be looking at a sale after years of underperformance and has appointed JP Morgan as an adviser on options for the business.
T-Mobile, which has about 15% of the UK market, has had three quarters of declining sales amid tough conditions for operators as they battle against the recession and stiff competition.
Vodafone buried the hatchet with Carphone Warehouse yesterday after agreeing to sell its contract mobiles across the chain’s outlets.
Vodafone dumped Carphone as a supplier of contract mobiles in favour of an exclusive deal with Phones4U in October 2006, but has returned to the chain in an increasingly tough and competitive UK market.
Carphone Warehouse continued to sell Vodafone’s pay-as-you-go phones and upgrades, but customers will be able to sign up for a full range of contracts and broadband services at its 800-plus stores from Tuesday.
Carphone chief executive Charles Dunstone said: “This agreement marks a continued strengthening of our relationship and will benefit both businesses and their customers.”
Shares in Vodafone and Carphone both ended the day off 4p, at 115.5p and 155.75p.