O2 mulls German MVNOs

By Georgina Prodhan

PARIS (Reuters) - Telefonica O2 Europe (TEF.MC: Quote, Profile, Research, Stock Buzz) is considering launching one or two more brand-name budget mobile operators in Germany to fend off a plethora of discounters started up by rival KPN (KPN.AS: Quote, Profile, Research, Stock Buzz).

O2 Chief Executive Peter Erskine told Reuters he regretted not having done more deals similar to one he did with German coffee and housewares chain Tchibo, under which the popular stores sell O2 mobile services under the Tchibo brand.

He added he could see no logic in O2's buying KPN's E-Plus German operations -- a move some analysts have predicted -- because it would be an expensive way to acquire a short-term advantage.

O2 is the third-biggest mobile operator in the competitive German market after Deutsche Telekom (DTEGn.DE: Quote, Profile, Research, Stock Buzz) and Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz).

E-Plus is the fourth-biggest and operates dozens of mobile virtual network operators (MVNOs), which sell cheap calls by piggy-backing others' networks. It is followed by a range of smaller discounters.

"We could well get into one or two tailored operations with big players again, a bit like our experience from Tesco (TSCO.L: Quote, Profile, Research, Stock Buzz) and Tchibo," Erskine told the Reuters Global Technology, Media and Telecoms summit in Paris on Thursday.

"You add to the market, they're in it for the long term, they're not just about price," Erskine said.

O2's joint venture with Tesco, Britain's largest supermarket group, has over a million customers.  Continued...