Vodafone eyes T-Mobile UK bid

Tie-up between Vodafone and T-Mobile would create the UK's largest operator with a 40% share of the market

Britain's mobile phone market faces a huge shake-up as Vodafone considers a bid to buy T-Mobile UK, the Financial Times reports today.

A tie-up between Vodafone, the world's largest mobile operator by revenue, and T-Mobile UK would create the UK's largest operator if it was to go ahead, with a 40% share of the UK market.

However, Vodafone's bold ambition for the acquisition of T-Mobile, which has an estimated value of between £2.5bn and £3.4bn, may be blocked by the regulators.

JP Morgan was appointed by T-Mobile UK's owner Deutsche Telekom to suggest fresh strategies for the business after years of under-performance.

Last night there was no comment from either Vodafone or T-Mobile, but sources close to the situation said the company was exploring the benefits of making an offer for T-Mobile UK or setting up a joint venture.

O2, which is owned by Spain's Telefónica and is currently the largest UK mobile operator, has a market share of 27%. Vodafone follows shortly behind with 25%, while France Telecom's Orange has a 22% share. T-Mobile claims 15% and Hutchison Whampoa-owned 3 has 8%.

The UK is the only major European market with five mobile operators, with each complaining about profit margins.

Analysts speculate that a deal where one operator owns 40% of the market may be allowed by regulators because of similar situations in France, Italy and Spain.

Terence Sinclair, analyst at Citi, Vodafone's broker, said earlier this month that the possibility of a tie-up between UK operators is more likely now than a year ago.


Angela Balakrishnan

The GuardianTramp

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