BT in talks to buy mobile operator O2

BT is currently in talks with Telefonica over buying the mobile network operator O2.

BT is currently in talks with Telefonica over buying the mobile network operator O2.

If the deal goes ahead, this would see BT regaining a mobile service and offering it another revenue outlet in the UK.

BT told Computer Weekly that discussions are currently at a "highly preliminary stage" with no certainty that a transaction would occur.

Gartner research director Charlotte Patrick, told Computer Weekly that BT wants to increase its hold of the UK market by becoming a quad player – in fixed networking services, broadband, voice and mobile.

Patrick said that the UK lacks quad network and telco service providers apart from perhaps Virgin. "BT is thinking of a way to get one over on Sky and Virgin," she added.

The telecoms giant is currently missing a mobile service as it sold O2 - which was once called BT Cellnet - to Telefonica in 2005 for £17.7bn.

BT has been vocal about its intentions to move back into mobile services after a decade.

Back in October BT denied that its return to the mobile phone market, was being pushed further back after reports emerged of technical problems holding up the process.

The operator first announced its intention to set up as a mobile virtual network operator(MVNO) in October 2013, after signing a contract with EE to access its 3G and 4G networks.

"BT sold off [O2] because it had debts," said Patrick. "And it has now purchased some spectrum, but you don’t want to build your own mobile network these days."

Growing a mobile product from scratch would not have the scale in today’s market and would give BT problems, according to Patrick, hence the need to buy an existing mobile operator."You don’t have the economies of scale or ability to deal with the device guys – Apple wouldn’t give you the best devices. You’d also have to buy retail stores if you wanted to offer mobile phones."

If BT is successful in purchasing O2, this would eliminate the problem of growing a network from scratch.

BT said: "We continue to develop our own plans for providing enhanced mobile services to business and consumer customers, in line with our previous announcements. We remain confident of delivering on these plans and have also been exploring ways of accelerating them, including assessing the merits of an acquisition of a mobile network operator in the UK."

BT said it had also received expressions of interest from shareholders in another UK mobile network.

This other mobile network is believed to be Orange and T-Mobile’s joint venture EE, which Patrick believes could lead to the EE name disappearing altogether.

"I see BT and EE as a slightly better mix from a brand perspective," said Patrick.

Because O2 has a stronger brand in the UK, while EE is only a couple of years old, it would be easier for BT to ditch the EE brand than O2.

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