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FT report increases Vodafone share price

SHARES in Vodafone Group Plc rose yesterday after the Financial Times reported that the cell phone giant was interested in buying T-Mobile UK, the United Kingdom unit of Deutsche Telekom.

Vodafone spokeswoman Libby Pritchard said the company would not comment. Deutsche Telekom and T-Mobile also declined to comment.

Vodafone shares led the London Stock Exchange higher, rising 0.9 percent to 116.7 pence (US$1.93) in midmorning trade.

Britain's cell phone market is the most competitive in Europe with five major operators. Vodafone, currently second behind O2, would leap into pole position if it acquired T-Mobile.

Telefonica-owned O2 currently has a 27 percent market share, Vodafone 25 percent and T-Mobile 15 percent.


Analysts said a Vodafone deal for T-Mobile would make sense because cut-throat competition among five companies has made profits particularly hard to come by in Britain. The market includes France Telecom's Orange with 22 percent of customers and Hong Kong's Hutchison Whampoa with just 3 percent.

The Financial Times said Deutsche Telekom had already appointed JPMorgan to explore potential suitors for offloading T-Mobile, which struggles to perform as strongly as its German parent.

"Given that similarly dominant players exist in France, Italy and Spain, the UK regulators might let this one through," said Manoj Ladwa, senior trader at ETX Capital. "Expect some volatility in UK telco stocks as the market makes up its mind whether it likes this potential deal and whether it thinks that Vodafone can pull it off."

In February, Vodafone and Hutchison Whampoa announced a deal to combine their units in Australia.



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