O2 to go German?

August 14, 2005 - source: BWCS

Once again UK mobile operator mmO2 has been the subject of intense bid speculation. This time the predator is said to be Deutsche Telekom's mobile unit T-Mobile. However, the former wireless wing of BT reacted quickly this morning to try to quash rumours that it is involved in takeover talks.

A statement from the British company baldly stated that "Currently there aren't any talks taking place regarding a merger or acquisition." However, given Deutsche Telekom's recent strong financial performance, the rumour-mill is once again in overdrive.

The German operator today announced that its net income for the second quarter of this year rose to euros 943 million (US$1.2 billion), compared to euros 577 million in the same period last year. At the same time, it revealed that revenues had grown to euros 14.7 billion, up from euros 14.4 billion in the second quarter 2004.

A large part of the responsibility for this increase in profit came from its mobile division, T-Mobile, which for the first time in two years managed to increase its home market share. Internationally it won almost 972,000 new customers in the US. DT's revenue from all German concerns fell slightly by 1.8% to euros 8.5 billion, but T-Mobile managed to add 623,000 new mobile customers.

With the company reporting growing profits and declaring itself on course to pay a dividend to shareholders for the third year in a row, it appears likely that it will soon join fellow ailing heavyweight France Telecom on the acquisition trail once more. If so, many are speculating that mmO2 maybe the first item on the menu.