Telefonica Finally Bids For O2

Buyout rumors have been swirling around European carrier O2 for a few years now, with KPN and Telefonica’s names coming up again and again. Telefonica’s finally come forward and made a $32 billion offer for the UK-based operator. Telefonica is based in Spain, but is one of the biggest carriers in Latin America, and adding O2’s British, Irish and German units are a good strategic fit and signal a definite interest for the company in European expansion. Both carriers also use i-mode — the i-mode alliance of foreign operators was supposed to deliver economies of scale to compete with the like of Vodafone and its global reach. The Starmap group of smaller European operators, including O2, and the Freemove alliance of Telefonica, TIM, T-Mobile and Orange were both supposed to deliver similar benefits. But given the inevitable bickering in these groups, it looks like there’s no substitute for simply growing your own scale. The deal also intensifies the pressure on T-Mobile, which will now be up against a heavyweight competitor in its two biggest European markets.

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