Gossip

Telefonica's due diligence? Hugely costly IT projects in O2...? Surely, not!

Word reaches your Sniffer that there may be a very simple explanation for why Telefonica is happy to pay so much more for O2 than the market expected: they're buying a pig in a poke.

The Hunky Mouse is prepared to let the cat out of the bag: wait till Telefonica finds out what it has to spend on updating the O2 billing system!

Our stray packet sniffer has spotted traffic alluding to "an Accenture project" at O2. Word is that it was supposed to take two years.

The new word is "Five." Five years; three years over project time, £200 million over budget, and in the mean time, O2 billing remains hopelessly broken.

Some will tell you that mobile telcos with broken billing software are two a penny; it's true. It's not widely known, but readers of NewsWireless will be aware that content is paid on the basis of expectation because the networks just don't provide information about downloads on which to base rigorous accounts.

At the time the O2 takeover announcement was made, several City (finance) sources complained that it had all been rushed through. Of course, a cynic might suppose this was crocodile tears from those who didn't get in on the deal and didn't make the associated commission. But no; it seems the deal was indeed rushed.

The day of the announcement, quotes suggested that the deal was put together from Friday to Monday. Subsequent research suggests this isn't so far from the mark, and that two weeks was all that was spent on negotiating.

In one sense, that's not fair. Senior directors of O2 and Telefonica have been having dinner together for months, and rumours of the takeover were plentiful way back in February at the 3GSM Congress in Cannes - when discussions were far enough advanced for one O2 director to tell your Sniffer that he "didn't think it would go ahead."

But did Telefonica know about the billing systems project? All the Hunky Mouse's sources say "They still don't..."