After Vodafone emerged as a potential bidder for T-Mobile's UK operation earlier in the week, a bidding war now looks set to break out as reports emerge claiming Spanish outfit Telefónica has weighed in.
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Telefónica owns O2 in the UK,and according to the Financial Times, threw its hat into the ring after realising that a Vodafone T-Mobile alliance would knock O2 off the number one spot in terms compares.
Deutsche Telekom is understood to have appointed JPMorgan to advise on its options with regard to the future of its British mobile biz,after taking an impairment write-down of close to 2bn on the unit during Q1.
Meanwhile, a spokeswoman for Orange owner France Telecom claimed the company was not interested in acquiring T-Mobile, but citing sources familiar with the situation the FT has said it maybe interested in a JV.
Any combination of the big four networks would have undisputed market leadership in the UK, with well over 40% of the customer base sewn up.
Mark Hodac, a technology partner at law firm White & Black Legal, said the UK mobile phone market was crowded compared to its counterparts in Europe.
"Consequently mobile phone companies are exposed to fierce competition domestically and are forced to operate at tight profit margins," he explained.
"The mobile phone industry has not been immune to the downturn and may well welcome [this] news on the basis that a reduction in the number of players in the market could allow the remaining operators to achieve healthier margins," Hodac added.