It has been announced that O2 will be franchising out its stores from mid-2013. It is being done to raise cash to save its parent company Telefonica.

Telefonica has a £58 Billion debt mountain, they have been advised to off-load some assets, O2 remains its highest earner and will not let it go.

Judging from the poor quality coverage lately,lack of 3G coverage and no 4G services, a lot of investment is needed and selling off a few stores is not the answer to this or its debt problem.

Telefonica have already off-loaded Manx Telecom,O2 Asia and parts of its German operation with plans to off-load O2 Ireland.

It still wouldn't be enough........therefore, wouldn't it make sense to merge with Vodafone's network similar to the EE set up which will also bring them back to market leaders as well as solve network coverage issues. It would have 32-33 Million subscribers not so different from when Orange and T-Mobile merged, and should be approved.

Alternatively, is this a chance for BT to get it back?

most of their stores already are franchises.

Aren't they already merging parts of the network with Vodafone, or is that more of an MBNL style thing than a full merge?

Well the 3G infrastructure yes, but i'm talking about merging the whole infrastructure and subscriber bases, 50% owned by Vodafone Europe and the other 50% owned by Telefonica. This will save both companies money,improve network coverage,reduce Telefonica's debts and will be the UK's largest telecoms firm not forgetting Cable and Wireless Worldwide and Thus which Vodafone now owns. A fixed network that is gonna provide a solution for better data services for Vodafone.

I doubt if they would be allowed under competition rules (monopolies & mergers etc) as that would effectively leave only 2 UK networks.... no disprespect to Three, but they are working closely with EE, sharing sites etc etc.

I totally agree, if they merged everything it would benefit them as well as the consumer... win win for everyone

But Three are only co-operating on a few aspects of the physical network. I'd think it's unlikely that they can dictate to each other what prices they can charge and the tariffs they can offer.

You already see that now - 3 can be dirt cheap compared to EE for a similar tariff.

If anything it would be the commercial aspects that make it unworkable. Two EE-style juggernauts probably isn't a good thing.

Actually T-Mobile full monty is being offered slightly cheaper than 3's offering, why? Because they have around 28 million customers and the chance you will call someone within EE,Orange,T-Mobile or Virgin Mobile or a UK landline is higher than prior to the merger meaning less termination rates to pay out. Also O2's termination rate is very low. Therefore they can afford it. By the way T-Mobile does not allow calls to Lycamobile,Cable and Wireless 07822 and a few other numbers to come out of inclusive minutes, you are charged extra, and calls to 08 numbers are very expensive on some plans as much as 40p per minute.

3's offer is totally unlimited and in some cases includes tethering and better speeds, more dc-hspa etc.

I thought Ofcom capped termination rates last year.

Again I don't think it will be a problem, Vodafone's mobile UK subscriber base has between 15 and 16 million customers excluding Cable and Wireless and Vodafone paging.

Vodafone also do not have much of a consumer fixed line service apart from the Cable and Wireless reseller services such as Post office and Tesco. And Thus' Demon is mainly aimed at businesses.

An O2-UK and Vodafone UK merger would provide the following:

Increased 2G and 3G coverage
Wide range of 4G coverage
Decrease Telefonicas crisis whilst retaining O2
Improved cash flow
Less operational costs
Entry for Vodafone consumer fixed services

The Cable and Wireless Worldwide company and network is the largest fibre network in Britain at the moment and has many LLU exchanges. It is underused and will be used for Vodafone 3G and 4G services amongst other services. It also provides Emergency Services and operator services.

Vodafone has complained about European predominant phone firms such as France Telecom and Deutsche Telekom about them damaging competition and making it extremely hard to compete. It therefore could have a chance of a UK merger to go ahead.

BT have far more fibre in the ground than C&W.

I get the feeling that O2 will continue to go with minimal investment. Telefónica will continue selling off as much assets as possible. Whilst O2 may buy a 4G licence I would expect them to do minimal investment in coverage much like they have done with 3G.

Haha get real, imo there is zero chance of Vodafone merging its home opco with someone else.

Lets clear one thing up, there isn't a cat in hells chance of there being a merge between Vodafone and O2. Not just because it would clear the relevant competition bodies.....but also Vodafone would not wish to expose itself through a joint venture to some of the debts and liabilities of the Telefonica parent company. A merger with H3G would be more likely I feel.

O2 UK is relatively insulated from what is happening at the parent company. So far as I aware it is run as an LLC or equal there of in this country, meaning vested parties of the parent company can't go after the assets from the UK arm. I suspect O2 will be sold as Telefonica is going to need the cash seeing as the Spanish government is out of coin right now and the only two companies with pockets deep enough to swallow a company that size would be BT or Sky.......

If either of those two came into the market....it sure would spice things up somewhat.

Vodafone might buy Three but never a merger not in the UK, just can't see them doing that on the home market

The only 2 companies big enough to buy O2 are BT and Sky LOL. There are plenty of international companies that would at least be interested in O2 if it were sold, Hutchison Whampoa were interested in O2 Ireland a while back even though they already have their own network in Ireland, the company certainly has the finances, it's even ran by Asia's richest man, who has a personal wealth of £15BN, and the company has very deep pockets indeed.

It wouldn't be possible for Vodafone to own C&W and O2, the competition commission wouldn't allow it.

There will be further Telefonica asset sales every year right though until 2015 as they have punishing dept repayment obligations, and defaulting on a debt repayment would essentially take them the final notch down on the credit rating. It is 1 above the lowest which is known in financial circles as 'junk', that is when investors would not lend any money.

It is already in the position where it has more debt in the business than assets. They are trying to prove that the valuation on assets is too low by floating the Latin American side so that investors are convinced the valuations are negative.

Expect further sales later in 2013, 2014 and 2015, but don't expect advance notification of what they are selling, they always deny it until the decision has been made so not to impact the share price. However they have to dispose of more assets to keep that 50 billion debt reducing as they have promised the investors.

What worries me is the declining revenue at O2 off the back of dropping call revenue, yet the lack of data they sell, which for the other networks is balancing the books, but for O2 it's not.

If O2 carry on it's current course of revenue decline by 2015 they will be making losses.

It doesn't matter if Hutchison Whampoa is run by Asia's richest man, its unlikely the regulators would allow H3G to merge as it would further reduce competition. I mention BT or Sky as they have esiting interests in the UK which adding a mobile network would allow them to further diversify their portfolio, thus increase ARPU and easily retend customers.

Given BT's declared interest in the 4G spectrum auction, I suspect if Telefonica were to divest O2 UK then they would be the most likely buyer, its a natural fit, and would tie in nicely with their future plans.

BT are bidding for the 2.6ghz for back haul capacity, they have made no noises about entering into the network operator market.

but yeah it O2 was for sale there would be plenty of interested parties around the globe.

BT went a long way in stating they absolutely have no interest in bidding or launching their own mobile network. They clarified the interest they had in 4G purely in backhaul or B2B services. They said they have no plans in mobile at all.

There's nothing to stop an international company owning O2, in fact it's already owned by an international company. There would be a list of names interested I'm sure.

Hutchison owning 2 brands would be the same as EE owning two, it would also still mean 3 owners of UK networks. There would doubtless be conditions like a sale of some spectrum etc. They have just completed the purchase of Orange Austria from France Telecom, despite already having a 3 network there.

For operational reasons, it may not be worthwhile Vodafone acquiring 3. They run on different frequencies and Vodafone working with the likes of Deutsche Telekom and France Telecom for the 3 network share would be highly unlikely.

Deutsche Telekom part owned by the German government,France Telecom,Cable and Wireless Guernsey and Telecom Italia have a track record of ensuring competition is squashed out and a Europe wide monopoly is formed.

In Germany, O2 and Vodafone struggle to compete with T-Mobile and Deutsche Telekom because of the corruption, what do you expect when it is part owned by the government.

In France and Poland everything is about Orange and France Telecom.

BT despite being expensive is probably the most open telecoms network in Europe, I wonder how easy it would be to choose a CPS provider on a Telecom Italia line???

The point is, it is already starting in Britain, Everything Everywhere. An embarrasing name for the owners, but in reality 'Everything Everywhere' really is a true statement to call a monopoly.

BT
Cable and Wireless communications (The other one)
Arquiva
Telecom Italia
Tata communications
Apex partners
Comcast
AT&T


All possible buyers

Because 3 Austria and Orange Austria are not big enough to become a competition problem. Also the Orange name will be used under licence to France Telecom, so they do still have some interest in the company.

Not completely.

It was to be done gradually by 2015, however Vodafone and Everything Everywhere found loopholes which has thrown a spanner in works.

Despite 3's termination rate campaign, 3,Lyca and Cable and Wireless Worldwide remain the UK's most expensive for termination rates.

BT are well known for keeping quiet about launching new products and services until days before launch.

BT's intention as you say is correct. However, its other intention could be to acquire an existing mobile network which holds a 4G licence and then combine it's own 4G spectrum share with the bigger network to become the UK's largest.

BT's current 4G bid could also be used alongside BT openzone and BT telephone boxes are ideal to install femtocell/microcells or whatever you call them.Many BT telephone boxes have BT wifi installed which has been brilliant for me.

O2 stores can not even compete with the likes of Carphonewarehouse....
Heres why, I was after an iPhone 5 as I was due an upgrade. Went to the O2 store and was told the deal that I wanted £36 a month and the phone was £80.
Explained that next door they had it with Carphone for £25 upfront and then £36 a month on the same tariff.
Asked would they match it and they said the only way they could do similar pricing was on a £41 tariff and the handset would be £29.99.
Crazy.