Telefonica chairman in London to push BT-O2 deal

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Telefonica’s chairman Cesar Alierta (pictured) has arrived in London in an attempt to persuade BT to choose its O2 business as the favoured acquisition target over rival contender EE, according to a Reuters report.

BT said it was in talks with O2 and EE regarding a potential acquisition of one of the mobile operators three weeks ago.

It was previously suggested that Telefonica was looking to secure a 20 per cent stake in BT as part of a potential deal. It is believed that the Spanish operator group is particularly motivated by the possible cost savings from any merger between O2 and BT.

EE owners Orange and Deutsche Telekom were thought to want a similar stake in BT as Telefonica. But the latest report suggested that the partners could be willing to offer more attractive terms to secure a deal.

Sources said they expect BT to make a decision on which operator to acquire early next week, if not today (Friday). One of the issues to consider is whether it prefers to have Telefonica or Orange and Deutsche Telekom as shareholders.

Reuters pointed out that Telefonica has had a difficult relationship with Telecom Italia, in which it still holds a small stake.

Telefonica is also the more aggressive player in terms of wanting to consolidate in markets in which it operates, meaning the company could potentially consider making a play to take more control of BT.

The Spanish operator group acquired O2 in 2006, five years after it was demerged from BT.

The Telegraph suggested that the O2 option would be cheaper and simpler for BT. However, as the UK’s largest mobile player, EE would bring more subscribers and a greater spectrum holding.

Hutchison Whampoa, which owns 3 UK, is expected to launch a bid for whichever operator is not chosen by BT.

If BT was to secure either of the mobile operators it would become a major force in the quadplay market, as it would have a full mobile offering alongside fixed services, broadband and pay-TV.

Such is the potential impact of a deal that Vodafone has been linked to a move to acquire international cable company Liberty Global, which owns Virgin Media in the UK. Vodafone has, however, distanced itself from such a move.

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