News

O2/Telefonica seriously planning to drop Airwave?

If Bloomberg believes that O2 is stupid enough to sell a company like Airwave, which has guaranteed blue-chip gold-edged business from defence and security and police going forward for years, then the only reason to doubt it, would be that you didn't think O2 was that silly.

However, the UK mobile operator these days is owned by Telefonica. As Bloomberg's story says, "Madrid-based Telefonica picked JPMorgan Cazenove to review the 'strategic alternatives' for the unit, including a 'possible sale,' it said today in a regulatory filing."

There's no doubt that O2 was a well-managed company, which kept its books immaculate, and managed its losses far better than its UK rivals.

That said, there are those who still think Telefonica was daft to pay what it did, and who are aware of a sense of disappointment at the top of the Spanish telco - and they say that the books have to be balanced, somehow.

Airwave is, probably, worth more to some merchant bank, than it is to Telefonica. It is a cash cow, and its earnings look secure (unless the threat to split up the airport operator CAA, is a warning of insecurities in the Government sector that nobody has dreamed of yet).

"Buy it, load it up with debt," was the formula offered by one merchant banker. It sounds like a working formula. The only interesting question would be: "Why can't Telefonica do the same thing?"