BT Might Bag a Bargain if O2 Buy Back Goes Through

By Gerald Lynch on at

With the quad-play market heating up, BT is said to be in talks to buy back O2, the network it spun off from its core operations in 2001 and sold to Telefonica in 2006. With details of the potential deal now circulating, BT's looking likely to get a bargain from the buy back.

According to Reuters, BT would offer Telefonica 6 billion Euros and a 20 per cent stake in its share capital for O2.

In total, the deal would be worth around 14 billion Euros, or roughly £11 billion. Considering Telefonica paid £18 billion for O2 back in 2006, and accounting for inflation, BT's not doing too badly out of the deal. Share prices for both companies were up slightly following the rumours.

While Telefonica may not benefit from a direct cash injection, integrating the O2 network with BT could lead to massive savings for the company, as highlighted in an 18-page document (seen by Reuters) detailing the deal. With Telefonica aiming to reduce its debt to below 43 billion Euros by the end of the year, it looks like everyone would win if the deal went through, making it look increasingly likely to happen. [Reuters]