Newspaper article The Evening Standard (London, England)

O2 Rings Up Record on New Talk of a Bid by Germans; MARKET REPORT

Newspaper article The Evening Standard (London, England)

O2 Rings Up Record on New Talk of a Bid by Germans; MARKET REPORT

Article excerpt

Byline: MICKEY CLARK

SHARES in mobile phones giant O2 nudged up another 11/4p to a new high of 159p today as questions were again raised about its future.

O2 has seen a pickup in its fortunes this year, and that has led to intense speculation that it may soon become the target of a [pounds sterling]15 billion bid from Deutsche Telecom or Holland's leading provider, KPN.

Now it emerges that KPN may itself become the target of a bid pretty soon.

The Dutch phone operator set tongues wagging among speculators on the Amsterdam bourse by saying it came close to terms of a e20 billion ([pounds sterling]13.6 billion) offer from Spanish rival Telefonica five years ago. Word is those talks may be back on, leaving Deutsche Telecom, operator of T-Mobile, with a free run at O2.

Only last month, O2 raised its revenue forecasts and revealed its had grabbed market share. KPN made an approach to the UK-listed company last year but this was rejected.

Analysts say Deutsche Telecom would have to sell off O2's sizeable German operation if it proceeded with a bid.

Mobile telephone products group DAT tumbled 161/2p to 40p, weighed down by a cautious outlook. The company posted slightly smaller losses in the first six months of the year but said it expects fullyear sales to be at the lower end of a range of between [pounds sterling]3 million and [pounds sterling]4.5 million given in July. It is to trim its line to four core products as a result of its strategic review.

Broker Panmure has placed its hold recommendation and 140p target under review, noting that although the group's results beat its predictions, it expects to trim its forecasts in light of the revised spending plan.

News of the proposed Boots/Alliance UniChem and NTL/Telewest mergers provided the rest of the market with a further boost although trading conditions were described as being thin.

Even so, the FTSE 100 index nudged back above 5500 with a rise of 26.4 to 5504.1.

Marks & Spencer was up a further 51/4p at 380p as broker WestLB raised its recommendation on the retailer from underperform to neutral and lifted its price target from 355p to 365p. …

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