Deutsche Telekom has bought UK mobile operator One 2 One for £8.4 billion bringing the German telecom giant's European mobile subscriber base to 12 million.
Analysts said the deal gives One 2 One strong financial backing to move into the business market in the UK, to support its rollout of broadband mobile services and to develop international partnerships.
One 2 One, which has around 2.65 million UK subscribers, has been up for sale since March when its current owners Cable & Wireless and Media One announced their intention to sell or float it. (see Newswire 28 March)
Months of speculation over who would buy One 2 One followed, with Deutsche Telekom always seen as a strong contender and known to want to invest in UK telecoms.
Telekom's chief executive Ron Sommer said the purchase of One 2 One was of "vital importance" to the German operator's international expansion plans.
"It meets two of the core requirements in our growth strategy - continuing to expand our highly successful mobile communications business in Europe, and establishing a strong presence and a solid basis for growth in the United Kingdom," said Sommer.
"We are acquiring an attractive and well established mobile communications network operator with a strong brand name and a substantial potential for growth in one of the EU's primary markets," he added.
Users in the UK can expect One 2 One to turn its attention to the business market, where it has a low profile at present, and to broadband mobile data services, according to analyst Bernt Ostergaard at Giga Information Group.
"They've got to move into being a business provider. Deutsche Telekom will also have to help them become a more internationally aligned player - it doesn't have strong international partners," he said.
Deutsche Telekom's arrival in the UK will be more bad news for BT, which last week saw France Telecom arrive here with an investment of $5.5 billion in UK cable operator NTL after it agreed to buy the consumer business of Cable & Wireless Communications. (see Newswire 26 July)
Ostergaard said today's deal was as much a political move as strategic move by the German operator.
"Deutsche Telekom is worried by rival Mannesman's very strong financial position. Mannesman was in the bidding early on for One 2 One so I think DT thought it was a very bad idea having their main competitor moving into the UK," he said.
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