Tesco said to consider buyout of O2's stake in mobile JV

Supermarket chain Tesco is reportedly looking to expand its presence in the UK mobile market by buying O2’s stake in their 50:50 mobile joint venture as it takes advantage of the fallout from Hutchison’s takeover bid.

The Telegraph cited industry sources as saying that Tesco was looking 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.

It is understood that Tesco signalled its intentions at a closed competition hearing in Brussels about the £10.25bn takeover of O2 this week, as it looks to expand sales outside of the groceries market.

The Telegraph suggested Hutchison was likely to welcome a sale of O2’s stake in Tesco Mobile, as it might help to sway competition watchdogs in favour of its takeover approach.

A Tesco spokesman told the paper: “Tesco is an interested party in the merger review process.

“It is important that any landscape created by the merger process allows challenger brands, such as Tesco Mobile, to deliver the best possible services for UK customers, and champions consumer choice.”

Tesco Mobile has around 4.5m customers and City sources estimated the buyout could cost the company up to £300m.

In a bid to win over regulators, Hutchison said last month that it would work with its rivals to maintain two competing mobile networks in the UK. The company also offered to freeze mobile call and text messaging rates in the five years following the merger and invest £5bn in network infrastructure.