Telefonica could consider O2 UK sale if market moves towards converged services

21 Nov 2014

Spanish telecoms giant Telefonica could consider its position in the UK if more of the market moves towards bundled fixed and mobile services, Reuters reports, citing comments made by chief operating officer Jose Maria Alvarez-Pallete at a conference in Barcelona. With a sale of the O2 UK business said to be among the possible options, and with the group not having ruled out asset sale with a view to achieving a year-end debt target of below EUR43 billion (USD53.8 billion) the executive said: ‘If the market goes convergent then we will need to evaluate our options.’ While the British unit was said to be performing well, with average revenue per user (ARPU) on the rise and improved churn rates, it is understood some high profile changes in the market, notably the expected launch of a mobile service from BT, could prompt a review of O2 UK, with Alvarez-Pallete adding: ‘In the landscape as it stands today we are in good shape … But the position taken by BT when and if it launches in mobile will be a key event. Virgin Media and others already have converged offers, but we don’t see a major appetite from consumers. So we’ll see how that evolves.’

In separate but related news, O2 UK chief executive Ronan Dunne has revealed that the cellco plans to increase investment in its 2G/3G/4G networks by between 10% and 15% next year. According to Mobile News, the executive noted that O2 UK had spent GBP600 million (USD940.7 million) on improving its infrastructure in 2014, some GBP400 million less than it invested in the previous year. ‘Our investment is actually going along way to addressing the challenge the government has recently set in relation to the debate on national roaming. We are investing in reducing the not-spots and partial not-spots in the UK already as part of a programme which will achieve 98% indoor population coverage on 2G, 3G and 4G,’ Dunne was cited as saying.

United Kingdom, O2 UK, Telefonica