Options
Debt burdened Telefonica spends billions on buying E-Plus
Nick_London
Posts: 486
Forum Member
✭
Telefonica who has a massive debt mountain, is to acquire E-Plus in Germany.
This will make Telefonica (O2) the largest in Germany. O2 in the UK in theory is still the largest. EE is parented by two companies and still trades under there old brands.
O2 UK is catching up with EE regardless.
Have they got their priorities right? Should this money have been spent on improving what they already have?
This will make Telefonica (O2) the largest in Germany. O2 in the UK in theory is still the largest. EE is parented by two companies and still trades under there old brands.
O2 UK is catching up with EE regardless.
Have they got their priorities right? Should this money have been spent on improving what they already have?
0
Comments
If Telefonica are serious about Germany and reducing their reliance on Latin America then this was always the likely play as O2 and E-Plus were looking like also rans against DT and Vodafone. They've already made a few disposals to create room for the additional debt.
It still requires regulatory approval which incidentally could have some longer term implications for the UK. If approved at the European level then they are saying that 3 operators is acceptable for a market the size of Germany. It would then be hard to argue that the UK should be any different especially as the UK is already more competitive than Germany to start with. Assuming willing participants, any possible regulatory block on reducing the number of UK networks to 3 would seem much reduced.
So which imaginary theory is that? O2 isn't the largest. By a country mile.
He basically saying that because they still use Orange and T-Mobile as brands they haven't completely merged yet so can't be counted as one network bit of a stupid idea but I understand what he says. Don't think he right but understand where he coming from.
So based on enapace's post, which is the largest?
EE is the largest. Yes it was created by the merger of two networks but they are owned by EE and fully integrated. Orange UK and T-Mobile UK are now sub-brands as such, running on EE.
But O2 isn't that far behind like you suggest. Like Enapace said, if you're to take T-Mo and orange as two separate networks then O2 is the largest by a country mile. That's also what Nick_London was trying to say.
I agree should be counted as one network let's be honest the brands orange and t-mobile will eventually disappear but they stay around for all major merger deals do at least for a while. Take Sprint it took the name Sprint Nextel when it merged with Nextel Communications. Now it has gone back to just Sprint it takes time for old names to disappear. But EE is one network it wouldn't be easy separate now even if it was possible.
I'm not sure why we keep going on about Germany vs UK number of players in the market. Nobody in the UK wants to merge or sell right now, and our market is not the same as Germany in many ways.
Germany isn't the centre of the universe either, many European countries have 4 or more networks. Nick keeps trotting out this Germany thing and suggesting we'll copy Germany purely on a regulatory basis.
I thought EE wanted to sell up.
For the record, the largest networks in the UK are:
1) EE 26.1m
2) O2 22.9m
3) Vodafone 19.54m
4) 3: 9.1m
Thanks for the information
Yeah if they do sell I can imagine AT-T will try to buy a certain amount they been on about a european based telecoms company for a while now.
Mobile Customers (at 30 June 2013) - EE: 25.288m, O2: 23.124m
Mobile service revenue (12 months to 30 June 2013) - EE: £5806m, O2: £4770m
Profit (EBITDA 12 months to 30 June 2013) - EE: £1130m, O2: £1337m
The UK has always been a more competitive market than the likes of Germany or France, that's not going to change any time soon.
And any decision Germany's equivalent of the competition commission makes has no bearing on what will happen in the UK - we are not beholden to internal German decisions.
Being the biggest player in a market doesn't automatically mean you'll be profitable.
Hmm you do have a point there but it certainly boosts the opportunities for profitability if they do good.
But the fact Telefonica have managed to dig themselves into their current hole does raise questions over their business nous. I'd say there's a lot of evidence to suggest that they would be able to screw this up.
True though I can see if they manage to make O2 Germany a profitable business then selling of somewhere like O2 UK to someone to lower there debt.
Now before anyone misunderstands me, I am not saying that this leads to a reduction in the UK, just that it makes it more likely as one hurdle will have been removed. None of the networks are particularly happy in the UK as it's more competitive with lower margins which consolidation might solve. However the thinking has been this couldn't really happen as it would probably be blocked by competition authorities. However if the EU gives the green light to a reduction to 3 in another large market that is already less competitive then they can hardly do different if the same question ever arose in the UK.
Is that clearer? It would still take two to tango and it might be 5 years or more away. All I am saying is that it would become more likely than before.
If a merger did happen who do believe it would be between out of curiosity ?
This is the kind of thing I was trying to get at. We really shouldn't underestimate it's potential impact on other European countries. Richard now reckons that the optimum number per market is 3 instead of 4.
http://www.bloomberg.com/news/2013-09-09/orange-sees-german-wireless-merger-approval-triggering-shakeup.html
Interesting I can't see it happening in UK but it will be curious to see if the deal goes through. If I remember right Three Ireland' s buyout of O2 Ireland is still waiting for approval as well.