Vodafone and O2 have both offered Deutsche Telekom around £3.5bn for its UK mobile network operator T-Mobile UK. The bids value T-Mobile's subscribers at £210 each.
Computer Weekly reported in June that Deutsche Telekom was looking to sell its UK subsidiary. T-Mobile, with about 15% market share, is the smallest of the five mobile network operators in the UK.
This morning, Ofcom reported that revenues for all mobile network operators were down in the first quarter. T-Mobile lost 440,000 subscribers compared with the first quarter of 2008. This would squeeze profit margins.
If either Vodafone or O2 were to buy their rival, it would make it the clear leader by market share in the UK. According to Ofcom's figures, which do not include 3Mobile, a deal would take either close to 50% of the market.
Mobile network operators are also under pressure to invest more to deliver a 2Mbps broadband service under the government's Digital Britain plan. This is likely to hasten a deal.