Smartphone mobile

Tesco could attract “substantial” third party investment to help meet the estimated £300m price tag for its proposed buyout of O2’s share in its joint venture mobile business, analysts predicted.

It emerged this week Tesco was in talks to buy O2’s 50% share of its joint venture Tesco Mobile and secure a long-term deal with Hutchison, which is planning a £10.25bn takeover of O2 as part of a giant merger with its Three UK platform.

Hutchison is said to welcome the sale of O2’s 50% stake in Tesco Mobile to Tesco, with the entire Tesco Mobile business valued at up to £600m by analysts.

Guy Peddy and Mark Murphy, telecom analysts at Macquarie Capital, said with its 4.5 million customers Tesco Mobile represented a more substantive offer than other potential competitors and could “be an interesting asset to third parties given its potential capacity-based network access”.

“We find the potential optionality in creating a standalone business worth more than £1bn intriguing as we don’t believe anyone captures this potential value,” they said.

The analysts cited German company Drillisch as a parallel. Tesco Mobile could “become the equivalent of Drillisch in Germany but with a more extensive distribution platform, with more than 3,500 stores in the UK and established online distribution.”