Euro Shrinkage: The Netherlands
All the rumors so far, started by a Dutch financial newspaper, Fem De Dag, center around the potential sale of mmO2 plc's Dutch business, O2 Netherlands. According to the paper, sources close to the situation say that fellow Dutch operators Ben (part of the T-Mobile International AG group of operators) and Vodafone Libertel N.V. are considering bids for the O2 business, which has about 1.3 million subscribers (11 percent market share). Ben has about 1.4 million customers (12 percent of the market) and Libertel 3.3 million (27 percent), which makes it the number two operator in the country.
Analyst consensus is that T-Mobile does not have the capital for an acquisition that would cost upwards of €200 million (US$211 million), whereas Vodafone Group plc (NYSE: VOD), which owns 70 percent of Libertel, would not have any problems meeting an asking price.
It seems unlikely that the smallest player in the market, Dutchtone, would get involved. It has about 1 million customers, only about 8 percent of the market, so could do with a boost; but its parent company, Orange SA (London/Paris: OGE), has other things on its mind (see Orange in Swedish U-Turn and Orange Shackled by FT).
Calls to both mmO2 and Vodafone met with the same response: They don't comment on speculation, which is what this is, spokesmen from both operators chimed. But we all knew they'd say that.
Bena Roberts, an analyst in the wireless services Europe division of Current Analysis, is certain that if O2 Netherlands is sold, it will be sold to an existing Dutch operator. She believes: Libertel is a definite contender; any interest from T-Mobile would be just rumor; and Dutchtone will be watching nervously, as consolidation would leave it in an even weaker position compared with other players. [Ed. note: Bena! Is that a cool name, or what?]
The company that would fancy taking on O2's subscribers most would be the market leader, KPN Mobile, which has 5.1 million customers (a 42 percent market share), especially as O2 is particularly strong in the business community.
However, that's one potential marriage that isn't going to happen. KPN Mobile spokeswoman Carla Van Lomwel rules out any possibility of an acquisition: "We are not in talks with O2 because the regulator would not allow us to [merge]. Our market share would be too great. But we are watching the situation very closely."
We bet they are. If Vodafone Libertel and O2 Netherlands were to join forces, then KPN would have a close competitor in its own backyard for once. — Ray Le Maistre, European Editor, Unstrung