Vodafone is weighing up the viability of placing a bid to buy T-Mobile UK

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Vodafone is weighing up the viability of placing a bid to buy T-Mobile UK, it is reported today.

The Financial Times reported this morning that the two options were either a straight-forward acquisition or a joint venture similar to the one signed with Hutchison Whampoa’s 3 in Australia.

Buying T-Mobile would cost Vodafone around £3bn, but a joint venture would be more difficult to agree than the Australia deal as the two companies are vastly different sizes in the UK. Vodafone has a 25% share in the UK, compared to T-Mobile’s 15%.

T-Mobile’s parent company, Deutsche Telekom (DT), made recent noises about its willingness to sell its UK business which has had a series of poor financial quarters.

Vodafone has equally suffered over the past 12 months, with margins rapidly falling as Vodafone faces competitors cutting prices.

DT CEO Rene Obermann and Vodafone CEO Vittorio Collao have both made public comments about the need for consolidation, particularly in the competitive UK market.

Obermann appointed Richard Moat as MD of the UK business, who started in the role last week. It is believed he has given Moat 12 months to improve the company’s performance before looking to sell the UK business.

DT is reported to have appointed investment bank JP Morgan to advise on strategic options for the UK division.

Obermann has previously said: ‘We feel the UK market is competitive, and consolidation would do good for that market.’

His opposite number, Collao, meanwhile, has said: ‘I don’t know if there is a three-way [merger], I don’t know if there is a two-way, I don’t know if there is a way at all — but it is clear to me that there are a few markets around the world where consolidation would make sense and we are one of the leading players, so we have a duty to look at everything. If things make sense and improves the conditions in the market, we will try our best.


source : mobiletoday