BT wants O2 back for quad-play effort

Nearly a decade ago, BT sold off O2 to Telefónica for £17.7 billion. Now it looks like the two are set for a re-union after reports that BT are in talks with Telefónica to buy the mobile operator back after showing interest in re-entering the mobile space as part of a quad-play effort.

BT could now see itself in a position where it has access to both O2 and EE's assets

BT, with the help of O2, could be the only provider able to offer a true quad-play solution consisting of home phone, broadband, mobile, and TV services. The telecoms giant is also in the unique position of having an army of broadband routers all over the country to help supplement their coverage and reduce the amount of cellular blackspots.

Imran Choudhary, senior analyst at Kantar Worldpanel, says: “Acquiring one of the largest networks in the country would give BT instant access to an established customer base, allowing it to tap into and cross-sell its internet, TV and landline packages. O2 would be a good fit as nearly a third of its customers already source their home broadband from BT.”

In the Ofcom-led 4G auction last year, BT won a bid for spectrum in the 2.6GHz band which is ideal for providing capacity and high-speed. O2 meanwhile won a bid for spectrum in the long-range 800MHz frequency which could lead observers to the conclusion this deal has been on the cards for well over a year...

The news becomes even more interesting when you consider that BT struck a deal with O2's biggest rival, EE, to use its vast 4G network last month. This is something which isn't likely to have been agreed upon had EE known this deal was on the cards, and BT could now see itself in a position where it has access to both O2 and EE's assets as well as its own.

In a statement, BT says it is "assessing the merits of an acquisition of a mobile network operator in the UK." The combination of the companies' spectrum - combined with BT's existing assets - could lead to a comprehensive and attractive proposition for customers. BT however notes that the company has received interest from shareholders in two UK networks to acquire their business.

Update 11/12/14: According to multiple sources, BT will make a decision between EE and O2 early next week. Telefónica Chairman Cesar Alierta flew to London on Thursday to progress talks with BT about O2, whilst EE owners Orange and Deutsche Telekom said they will accept shares in BT to reduce their significant acquisition cost.

Do you think a BT consumer mobile network will be successful? Let us know in the comments.

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