Deutsche Telecom, KPN disagree on O2 value; talks suspended |
|
|
Published
:
Wed, 17 Aug 2005 11:05
|
AMSTERDAM: The corporate battle for the acquisition of British mobile phone company O2 is now under a ceasefire of sorts. Both the suitors - T-Mobile owners Deutsche Telekom, and its Dutch rival KPN, yesterday withdrew from talks about a combined bid for O2.
Both the telecoms said there were structural issues which neither company agreed upon. A reliable source explained that neither telecoms agreed on who should bear the risk of upping the offer if O2 rejected the bid or a rival made a bigger offer. Also, neither party seemed to agree upon the value of O2’s business in Germany.
Apart from confirming that they did hold talks about a combined bid, both the companies declined to provide details about the deliberations.
KPN which had made a £10bn offer 18 months ago that O2 rejected, said it was confident of faster growth in Germany if it applied its multi-brand strategy that had already proved successful in Belgium. The acquisition of O2 would have allowed KPN to keep the former’s German business from gobbling up its own E-Plus which was fast losing market share. KPN hoped to merge E-Plus with O2’s operations in Germany.
Rival bidder Deutsche Telekom, on the other hand, would have gained O2’s business in Britain and Ireland. Deutsche’s T-Mobile was losing substantial prepay business and growth in contract customers was also inconsistent. It hoped the acquisition of O2 would reverse the downturn.
A combined bid for O2, if both the parties had agreed on it, is estimated at $14.3 billion, about 160p a share.
Deutsche Telekom said it would not make another bid immediately but was willing to reconsider if O2 sold any of its businesses or if another offer came up. It is unlikely that Deutsche Telekom makes a solo bid because of German regulatory limitations. Likewise, British regulators are also not likely to allow a merger of O2 with the German-owned T-Mobile. Even if Deutsche does bid for O2, it will have to find another buyer for O2’s business in Germany as per regulation.
KPN made an ambiguous statement saying it may still be interested in O2’s German operations.
O2 Germany which was spun out of BT in 2001, has advanced from fourth place to second place giving tough competition to KPN’s E-Plus.
|
|
|
|
|
|
Print this Story
