UK: Tesco seeks deal to buy O2 out of joint venture for mobile push

Tesco is planning to take advantage of the fallout from Hutchison’s £10.25bn takeover of O2 with a big push in the UK mobile market, seeking to expand sales outside the tough groceries market.

The supermarket, which has had a 50:50 joint venture with O2 since 2003, is aiming to buy the portion of Tesco Mobile it does not already own and secure a long-term deal with Hutchison for capacity on the merged 3 and O2 networks, according to industry sources.

Tesco signalled its intentions at a closed Brussels competition hearing about the £10.25bn takeover of O2 this week, according to people present. The expansion plan represents a big shift by Tesco chief executive Dave Lewis, who last year explored a sale of Tesco Mobile as he sought to repair the company’s battered balance sheet.

It is understood that Hutchison is likely to welcome a sale of O2’s stake in Tesco Mobile, as the Hong Kong conglomerate believes it would help convince competition watchdogs to approve its own takeover.

The European Commission’s modelling has predicted that consumer prices could increase 6pc as a result of the combination of 3 and O2, according to sources. The figure would fall to 1pc if Tesco mobile was independent, it is claimed.

Full content: ARS Technica

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