Tesco Aims To Make Deal Ahead Of O2/Three Merger

mobile-tesco-three-o2Since 2003, Tesco Mobile has been a 50:50 joint venture with the mobile network O2 as it does not own the infrastructure and rents capacity from the network. However, as the much-discussed merger between O2 and Three quickly approaches with the latter company taking over the former’s services, Tesco is aiming to plan ahead for the future. It is currently seeking to buy out the half of this joint venture that it doesn’t own, allowing it to have a fully owned Tesco network. Instead, it wants to secure a long-term deal with Three’s owning company Hutchinson.

The supermarket apparently made these intentions clear during a closed competition hearings in Brussels earlier this week. It marks Tesco’s intentions to become a genuine competitor in the mobile network market. It is a complete change in mindset for the company. Last year the supermarket’s chief executive Dave Lewis was reportedly considering a sale of its mobile division to balance its difficult financial situation.

Three and O2 may, in fact, welcome their desire to buy the other 50% not currently owned by Tesco. After all, one of the main reasons the O2 and Three merger has caused some controversy (notably among regulators) is the lack of competition there would be in the United Kingdom should it go ahead. Having Tesco become another competitor (alongside Sky who are reportedly looking at starting their own mobile network) could possibly allow the O2 and Three deal to go ahead. Tesco Mobile would take with it 4.5 million customers and could cost around £300 million in total.

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