The expected flood of mergers and acquisitions among Europe’s hard-pressed cellcos has begun mainly with second tier players and markets, with deals in The Netherlands, Austria and elsewhere. Many involve expansion plans either by Mexico’s America Movil, or Hong Kong’s Hutchison Whampoa, via its 3 Europe group ‘ including the latest rumored deal, in Ireland.
There, local newspapers claim Hutchison’s 3 Ireland unit could make a bid for Telefonica’s O2, though it could face counterbids from pan-European cable giant Liberty Global, and from incumbent telco Eircom. Liberty already owns Ireland’s largest cableco, UPC Ireland and may be looking to add a wireless element to its offering, as it has in other markets via cellco deals or Wi-Fi hotspots.
O2 Ireland, currently owned by Telefonica of Spain ‘ which is looking for ways to reduce its debt ‘ is the second mobile operator in the country, with 1.53m subscribers, behind Vodafone with 2.16m and ahead of Eircom’s Meteor unit and 3 Ireland, the fourth player with just 500,000 customers.
According to Spanish newspaper Cinco Dias, Telefonica would look to raise between €700m and €800m from the sale of O2 Ireland, despite the cellco’s struggles ‘ in the first quarter, its revenue fell by 12.2% to €136m. The Spanish giant has appointed Bank of America Merrill Lynch to advise on the sale.
Meanwhile, France Telecom wants to develop relationships with fixed providers such as cable operators across Europe in a bid to offer quad play bundles, chief strategy officer Elie Girard told Bloomberg recently, citing Verizon’s alliances with four cablecos in the US. ‘When you look at the addressable market, it’s shrinking by several points every year,’ Girard said. Of course, Orange has both businesses in France, but wants to replicate that model elsewhere. However, it complains that regulators often stand in the way of bundling. While the French agency, Arcep, has encouraged competition to Orange, it says it does not see the same approach to incumbents elsewhere, citing Romania and Belgium. ‘Where we are alternative operators, we do not enjoy a symmetrical situation,’ Girard said. ‘It’s a double penalty.’