Nick Goodway: BT has called it right with its full circle move on O2 in UK

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There, in return for my hard-earned £50, I was handed a box containing a Cellnet phone.

It was roughly six times the size and 10 times the weight of my current, not very smart, phone. The box also contained a voucher for £20 worth of calls. Not a bad deal.

It was only a few years later that BT, having bought out its partner in Cellnet, Securicor, demerged the now-renamed mmO2 with a stock market value of some £10 billion.

O2, as it was again renamed, went on to be a FTSE 100 company, spent billions on 3G spectrum in Gordon Brown’s hugely successful auction and ultimately fell to an £18 billion takeover from Spain’s Telefonica.

Now BT is looking at buying back O2’s UK arm for something considerably less than £18 billion and probably less than £10 billion. Just to add interest BT is also talking to O2’s archrival EE, the business formed out of the combination of Orange and Deutsche Telekom’s UK interests.

None of Telefonica, France’s Orange or Germany’s Telekom is a particularly happy owner of a UK mobile network.


The industry, which enjoyed massive growth through the nineties and noughties, is now largely a utility relying on growth in data to counter falling call and text revenues.

BT, by contrast, since the departure of Sir Peter Bonfield in 2001, under Ben Verwaayen and more crucially Lord Livingston, woke up to the fact that it too is a utility.

In fact, more recently, it has reinvented itself as a growth company based largely on broadband and its high stake move into television.

In one sense chief executive Gavin Patterson is completing a circle BT began almost 30 years ago. But he is doing so at a fraction of the cost it might have cost BT to have done it alone.

Billions of pounds have been spent and largely wasted on buying spectrum and customers.

Buying a network today is a far better bet than simply becoming yet another virtual mobile phones company using one of the incumbents’ masts and towers.

And for once, it is European investors who will be counting the cost of making expensive investments in UK infrastructure.

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November 25, 2014 |
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