mmO2 ripe for takeover

But it's only just been set free...

BT's soon to be spun off mobile division mmO2 will be an attractive acquisition for one of the leading 3G-wannabe telcos in Europe. Those thought to be vying for the opportunity include Telecom Italia Mobile, Spain's Telefonica Moviles and Hong Kong giant Hutchison Whampoa, leading analysts predicted today. Michelle de Lussanet, European telco analyst at Forrester, said: "A takeover of mmO2 will occur as the demerged company has relatively low debt levels since BT will take on most of the burden of the UMTS licence fees." Virtyt Koshi, a senior analyst at Ovum, said: "There is a lot of buying speculation going on in the market at the moment. Telefonica wanted to buy the whole of BT last year until the CEO preparing it got sacked. Telefonica are looked on favourably by the market at the moment and could make a bid, as could Italia." However, Koshi added: "Hutchison Whampoa could make a bid for mmO2 as they don't have a subscriber base yet." Whampoa holds a 65 per cent stake in Hutchison 3G, the new entrant 3G licence holder in the UK. Koshi noted that if Hutchison bought mmO2, it would be in the unprecedented position of holding two 3G franchises A spokesman from Hutchison 3G said he would be surprised if the group bought mmO2. He said the purchase of a ready made customer base may bring into question Hutchison's viability as a new entrant licence holder, which would cause bickering in the telco ranks. However, if Hutchison did buy mmO2, Ovum's Koshi believes "Whampoa would have a subscriber base and could give back the mmO2 3G licence" which is a lower bandwidth than Hutchison's. The DTI refused to comment on whether it would be feasible for Whampoa to return mmO2's lower spectrum licence and keep the new entrant's higher spectrum bandwidth.