Staff Reporter

O2s share price jumped to 206p on the announcement sparking talk of counter-bids. Analysts suggested that German operator Deutsche Telekom and Dutch operator KPN could re-launch a joint-bid for O2 despite withdrawing from talks in August when O2s share price was closer to 160p.

Ovum research analyst Dan Biesler said: O2s market price traded up beyond 200p following the announcement which suggests that KPN or Deutsche Telekom might jump in – though both said a couple of months ago that they hadnt proceeded for price reasons. So they would have to significantly change their position to bid now.

However Deutsche Telekom counted itself out of the running on Wednesday. Deutsche Telekoms share price dropped five per cent following its statement that it would not launch a counter-bid for O2.

Analysts said that Deutsche Telekom might instead look to purchase Virgin Mobile and that KPN could also be a takeover target.

Nomura telecoms analyst Mark James added: The share price indicated investor anticipation of a higher bid from Deutsche Telekom. But it was by no means certain. KPN holds many of the cards.

James said that Deutsche Telekom would have had to offload O2s German operation in the event of a counter bid so that it wouldnt appear anti-competitive. Much would have depended on the cooperation of KPN which was mooted to take on O2 Germany as part of talks with Deutsche Telekom over the purchase of O2 in August.

James said: Even if Deutsche Telekom doesnt make a higher bid for O2 speculation will intensify that Deutsche Telekom may bid for Virgin Mobile. The 10 per cent rise in Virgin Mobiles share price on November 1 demonstrates that this is already happening.

Biesler said: T-Mobile already counts Virgin mobile customers as part of its network. It sells minutes to Virgin Mobile. It doesnt make sense for it to buy Virgin Mobiles customer base. T-Mobile already has problems with brand and customer service in the UK and such a deal would not fix them.

Virgin Mobile declined to comment on market speculation.

Biesler added: KPN is also a bid target and its recent share performance suggests that there are interested parties out there. There will be more network deals but probably on a smaller scale involving companies such as [French operator] Bouyges Telecom and operators in eastern Europe where growth rates are good and margins high. Operators in western Europe are generating significant cash flow to make such deals possible.

Analysts were unconvinced of the benefits of the Telefonica deal for O2.

IDC senior analyst Paolo Pescatore said: What does Telefonica give O2? How important is Latin America to O2? Vodafone T-Mobile and Orange dont have any presence there so why should O2 want one?

James said: It is difficult to see what the combined entity can do that O2 could not achieve in isolation. Handset vendors are not negotiating from a position of strength. When a company with 25 million customers such as O2 picks up the phone the Nokias of this world come running.

Biesler said: There is a risk of Telefonica meddling in O2s affairs. O2 has carved out a niche for itself – it is young not too trendy and data-orientated. Its branding has been a triumph. There is a danger that if Telefonica meddles too much it could become like Orange where France Telecom has run its brand into the ground.

This week O2 CEO Peter Erskine told BBC Radio 4 Today: The board is recommending it. Obviously the shareholders will have to decide whether they accept it. We would envisage that if they do it would close round about January or February. It is very good for shareholder value. Its an all-cash offer. Its 2 a share which is somewhere in the range of a 25 per cent premium over the past three months.

Avenir sales director Tanny Price said: If something happens it wont be for a while so for us its business as usual. O2 is a very good network. Weve been its number one distributor for the past few months and intend to keep cracking the whip. Weve got some good business in the pipeline and intend to deliver on it.

Also the CWU has sought assurances from O2 about the impact of the takeover on staff.

A CWU statement said: We have been advised that there is no intention to change the business plan or direction of O2 and we will be seeking written assurances that there is no adverse impact for CWU members.

We now accept that this was inaccurate. Nick Moore was not fired by Orange. He resigned after five years with the company and is moving to a firm outside of the mobile sector.

Nick was not escorted from the property as we suggested. In fact Nick is still at Orange working out his contract until the end of the year. Nothing personal was intended by this story.

We apologise to Nick for any distress or embarrassment caused and are happy to set the record straight.

This week Toshiba Mobile also confirmed its rumoured six-figure sponsorship of Oasiss European tour which kicked off yesterday (October 20) in Germany and runs until December 22.

The new Toshiba 803 handset which launches on Vodafone next week comes bundled with a 512MB SD card with audio/video footage plus a demo acoustic version of the new Oasis single Let There Be Love in stores in early November.

The 803 also includes five exclusive live audio and video tracks recorded at City of Manchester Stadium in July 2005.

Toshiba Mobile marketing manager Chris Bignell said:

The tour takes place in Western Europe and that is where we want to establish ourselves. We have had lots of success in Japan where we have been a leading supplier to Vodafone. It makes sense to take that relationship into other markets like Europe.

Our approach is somewhat different from other manufacturers because we focus on operators and offer a high level of exclusivity in terms of devices.

He added: We have been in contract talks with the band for a while. We have been looking for music deals to promote this device which is a music player as well as phone. It is also a good opportunity to raise our profile among fans. We can do demos and distribute leaflets.

The 803 3G clamshell features an external music player and an external 1.3-inch screen that displays track details. It also features a 2.2 megapixel camera stereo twin speakers and Bluetooth.

The bands European tour hits Paris Milan Barcelona Madrid Belfast Dublin and Cardiff before Christmas.

We are always looking at interesting acquisitions opportunities confirmed Avenir sales director Tanny Price.

Leading European distributor Dangaard Telecom has already revealed it is a suitor for 20:20 and Dextra Solutions (Mobile News September 9).

Mobile News reported last month that the network was being investigated by the watchdog following a complaint from O2 that the advertisements were misleading.

On October 12 the ASA upheld O2s complaint saying that the headline claims would be interpreted as general superiority claims over the other networks even though the small print focused on call success rate.

Vodafone argued that the graphical signal device next to the headline emphasised that the ads were about the ability to make a call.

The ASA instructed Vodafone to seek advice from the Committee of Advertising Practice advice team before submitting future advertising.

Its 12-month contracts are for 60 100 200 and 400 inclusive minutes and cost 20 24 32 and 44 a month. An 18-month contract costs 18 22 30 and 40.

All tariffs have free itemised billing and 5 of bonus airtime. There is also a promotional offer of half-price monthly charges for three months on 12-month contracts and six months on 18-month contracts.

One Vodafone insider remarked that Virgin could afford to give customers money back at the end of the contracts as they are so expensive.

The Vodafone 3G Hero Tariff is 40 a month for 500 minutes and 100 SMS for a 12-month contract). The Virgin 400 Tariff is 44 a month for 400 minutes with no SMS allowance.

Finnish manufacturer Benefon develops GSM/GPS devices with integrated navigation and location services. New Benefon CEO Jonathan Bate said that it would launch one handset before Christmas and a further three devices next year. Bate said that Benefon would soon launch a sub-brand that will appear on its devices alongside the Benefon brand.

Bate said: We will launch a prosumer device this quarter and consumer and mass-market devices next year. By next Christmas we hope to be much more visible in the consumer space. A new brand that will represent us as a navigation company will also launch in the next couple of weeks.

The distribution agreement between 20:20 and Benefon will see 20:20 provide warehousing and logistics inventory management and next-day delivery of Benefon products to operators retail outlets and large corporate users throughout the UK and Ireland.

20:20 managing director Rod Millar said: We have been working with Benefon for the past 12 months and have generated significant interest from operators retailers and corporate users. We expect to distribute more than 200000 units in the first year.

Benefon chairman Brian Katzen said: Our initial strategy called for aggressive penetration into the UK and China and thereafter mainland Europe and the US so we are on track.

Motorola said that the acquisition of Sendos R&D team and patent portfolio in June as well as the relocation of its mobile division to larger offices in Basingstoke this month showed that UK growth continued. It is understood that UK job cuts have been insignificant.

We havent broken the figures down by country claimed EMEA director of communications Mark Durrant. Staff that have been affected have been informed already so the filing to the SEC was not new to them.

The headcount wont necessarily go down anyway because of the acquisitions including the Sendo R&D facility in the UK an i-mode development team in France and lots of engineering and manufacturing elements.

The global job cuts will result in pre-tax costs for Q3 of around $70 million ( 40 million) in severance charges and $20 million in asset impairments.

The network has teamed up with handset insurance provider CPP fonesafe and the police to educate consumers about the benefits of signing up to the National Mobile Phone Register launched by the National Mobile Phone Crime Unit.

The roadshow kicks off in Newcastle tomorrow (October 22) and will move to all T-Mobile stores in Birmingham Sheffield Liverpool Leeds Manchester and Glasgow over the following six weeks.

Home Office statistics show that around 50 per cent of street crime is linked to mobile phone theft. The campaign aims to register more handsets on the National Mobile Phone Register giving police the ability to track stolen phones and link them to phone thieves.

A T-Mobile spokeswoman said: Parents should be aware of the pros and cons of allowing their children to use mobile phones. It is essential that mobile phone users are aware of this database and ensure that they are registered as all CPP fonesafe and T-Mobile customers are.

The payment will be made in two stages with a 6 million initial cash offer plus a further 5 million to be paid depending on ICBs future profitability.

ICB targets SMEs along the M4 corridor operating as a mobile service provider for Vodafone and O2. It reported gross profits of 4.5 million in the year to April 30 2005 on revenues of 14.8 million.

Alternative Networks CEO James Murray claimed the combination of ICBs sales force and the strong ARPU from both fixed and mobile customers made a compelling argument for the acquisition. He also predicted it would enhance earnings in the first year.

We have known ICB as a regional competitor for several years and believe the business will integrate well with Alternative Networks said Murray.

We continue to seek further suitable acquisitions as we implement our balanced strategy of organic and acquisitive growth.

Alternative was understood to be in the frame to buy Anglia Telecom in March alongside The Carphone Warehouse. Anglia was eventually sold by parent company TTG Europe to Symphony Telecom for around 10 million.