T-Mobile UK value-accretive at 4 bln euros -analysts
* T-Mobile UK valued at 4.2 billion euros - Execution Ltd
* All operators would benefit from UK market consolidation
* JP Morgan conducting strategic review of T-Mobile UK
By Georgina Prodhan and Victoria Howley
LONDON, Sept 4 (Reuters) - Deutsche Telekom's (DTEGn.DE) poorly performing subsidiary T-Mobile UK would be worth buying at a price of 4 billion euros ($5.7 billion) for either of the two top UK operators, Telefonica's (TEF.MC) O2 or Vodafone (VOD.L), analysts said on Friday.
JP Morgan (JPM.N) has been conducting a strategic review of the business, which is under the new management of Richard Moat, assessing the company's stand-alone options as well as the viability of a sale, banking sources also said. A figure of 4 billion euros has begun circulating in the media as a price Deutsche Telekom hopes the business would fetch.
T-Mobile UK began losing customers last year as it failed to keep up with new deals and handsets offered by rivals, raising expectations that it was ripe for a takeover.
Bernstein Research analyst Robin Bienenstock said all operators would benefit from a consolidation of the crowded UK market, where five companies compete, and that it would be better to be a buyer than a bystander.
"We estimate value creation for Vodafone and O2 to be 6 billion euros and for France Telecom about 5 billion euros were they to purchase T-Mobile UK," he said in a research note, adding that France Telecom should be comfortable with paying just over 3 billion euros.
"This does not include T-Mobile UK tax assets which we believe to be worth about 2 billion pounds ($3.3 billion), he added.
Andrew Hogley, an analyst at Execution Ltd, said he valued T-Mobile UK at 4.2 billion euros, adding that Deutsche Telekom would want to realise proceeds of over 5 billion euros in any transaction.
Such a figure would be a tall order in the still fragile M&A market, where buyers of assets are in short supply despite the rallying markets and stronger economic outlook of the last few months.
While company bosses are more confident and deal pipelines are improving, buyers still tend to harbour radically lower ideas than vendors when it comes to talks over what an asset is worth.
Any would-be acquirer would also have to take into account the risk that a deal could be blocked by Britain's competition regulator, which said in July it was happy with the state of competition in the market. [nL8526265]
O2 currently has about 27 percent of the UK market, followed by Vodafone with 25 percent, France Telecom's Orange with 22 percent, T-Mobile with 15 percent and Hutchison Whampoa's (0013.HK) 3 UK with 8 percent.
A consolidation of the major players would still leave 3 unhindered in its disruptive pricing behaviour that has contributed significantly to price erosion in Britain, for example by launching a Skype phone for Internet calling.
($1=.7008 euros)
(Editing by Greg Mahlich)
((victoria.howley@thomsonreuters.com; +44 (0)207 542 2415; Reuters Messaging: victoria.howley.reuters.com@reuters.net)) Keywords: TMOBILE UK/VALUATION
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