Bidders Circling Over 3G Wireless Operator mmO2?

Europe : BWCS : UK mobile operator mmO2 has denied it is the subject of a possible takeover bid this morning. However, rumours swirling around the City of London have propelled the company’s shares to a new high.

The former mobile wing of BT is said to be a target for German telco, Deutsche Telekom, among others. A group of private equity investors is also said to be on the verge of mounting a bid for mmO2. The UK mobile company remained tight-lipped this morning and refused to comment on any speculation, saying only that it had not received any formal approaches.

The sixth-largest mobile company in Europe has often been the subject of takeover speculation, but interest has heightened recently as Egyptian mobile group Orascom prepares to buy out Italian mobile outfit Wind. According to City sources a successful bid from Deutsche Telekom, would see mmO2 and T-Mobile join forces in the UK and Germany. The British operator has performed well in both markets recently and its growing subscriber base would be a welcome addition to T-Mobile.

Dutch telecoms group KPN was the last operator to try to buy mmO2, but in the end the negotiations came to nothing and the attempt was called off last year. The mere fact that consolidation is again on the cards in the European mobile industry is indicative that the major telcos are emerging from their debt-imposed hibernation of the past few years following the slump in the telecoms market.

Deutsche Telekom has already announced its intentions to consider acquisitions if the targets were profitable. However, it says it will only enter markets where it is already a player. France Telecom has also said that it has around euros 500 million to invest in European acquisitions and Spanish operator Telefonica, which has been investing heavily in South America, is known to be under pressure to increase its European presence.

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