Tesco has in recent days held talks with bankers about a possible sale of its mobile business, it emerged this weekend.
The U.K. supermarket chain could part ways with its mobile phone unit as part of a broader sale of non-core assets, the Financial Times reported on Saturday, without naming its sources.
Tesco Mobile, a mobile virtual network operator (MVNO) running on O2’s network, could be worth hundreds of millions of pounds, the paper said, noting that Tesco generates around £100 million a year in pro fits from the business.
The MVNO is a 50:50 joint venture between Tesco and O2.
The value of the business lies in both its brand and its network of Tesco Phone retail outlets, the FT said. In addition, the MVNO has a sizeable subscriber base, selling around 2 million phones per year.
Competition in the U.K. mobile industry is intensifying. There is consolidation afoot between the network operators, with EE in the process of being taken over by fixed-line incumbent BT and Hutchison Whampoa’s 3UK working on a merger with O2.
Furthermore, a new MVNO is about to launch.
Last month handset retailer Dixons Carphone shared details of its new virtual venture, iD, and on Monday confirmed that it will bring the service to market this week.
O2 has naturally been named as a likely buyer for Tesco’s 50% stake in their joint venture, but its acquisition by Hutch could make a deal more difficult to broker.
TalkTalk is also in the frame, having acquired Tesco’s Blinkbox streaming service and broadband customer base in January.
