One2One finally falls to DT

German giant expands European coverage to 12 million subscribers with £8.4bn acquisition deal.

Deutsche Telekom has bought UK mobile operator One2One for £8.4, bringing the German telecom giant's European mobile subscriber base to 12 million.

One2One, which has about 2.65 million UK subscribers, has been up for sale since March when its owners, Cable & Wireless and Media One, announced their intention to sell or float it.

There has been months of speculation over which company would buy the firm, with Deutsche Telekom viewed as a strong contender and known to want to invest in UK telecoms.

Ron Sommer, chief executive of Deutsche Telekom, said the One2One purchase was of vital importance to the German operator's international expansion plans.

"The deal meets two of the core requirements in our growth strategy - continuing to expand our mobile communications business in Europe, and establishing a strong presence and solid basis for growth in the UK," he said.

"We are acquiring an attractive and well established mobile communications network operator with a strong brand name and a substantial potential for growth in one of the EU's primary markets," Sommer added.

Analysts believe the purchase gives One2One strong financial backing to move into the UK business market, to support its introduction of broadband mobile services and to develop international partnerships.

Bernt Ostergaard, analyst at Giga Information Group, stated that users can expect One2One to turn its attention to the business market, in which it has a low profile, as well as focus on broadband mobile data services.

"One2One has to move into being a business provider. Deutsche Telekom will also have to help it become more of an international player - it doesn't have strong global partners at the moment," he pointed out.

But Deutsche Telekom's arrival in the UK will increase the competitive pressure on BT, which last week saw France Telecom enter the domestic market with an investment of $5.5bn in UK cable operator NTL, after it agreed to buy the consumer arms of Cable & Wireless Communications.

Ostergaard claimed the One2One deal was as much a political move as a strategic decision by the German operator.

"Deutsche Telekom is worried by rival Mannesman's strong financial position. Mannesman was in the bidding early on for One2One so I think it's likely that Deutsche Telecom believed it was a bad idea having its main competitor moving into the UK," he said.