Shareholders in O2 may well be excused for wondering what to do next.

After Monday’s 200p a share bid by Telefónica, which values the company at £17.7bn ($31.3bn), the question is whether another bidder is likely to emerge to enrich them even further.

Since the day O2 was floated in 2001, when it was demerged from BT at 78p per share equivalent to a market capitalisation of £6.8bn, the company was always seen as a likely takeover target.

But the first sniff of serious interest came in February 2004 when management rejected an offer from KPN, the Dutch incumbent, that valued the company at roughly 110p a share.

At the time, other likely suitors thought to be interested included NTT DoCoMo from Japan, Hong Kong-based Hutchison Whampoa, which has its 3 mobile business, Telefónica, and Telecom Italia Mobile. Then, just as now, even former parent BT was rumoured to be another bidder.

Fast forward to November 2005 and the two obvious missing names from any list of potential bidders are Deutsche Telekom and France Telecom. The latter is thought unlikely to step forward after spending €10bn ($12bn) on Spain’s Amena recently. The former made its intentions quite clear over the summer when it approached KPN, its Dutch rival, about a possible joint bid for O2, rumoured to be in the region of £14bn.

The German incumbent was eyeing O2’s main UK operation and its smaller Irish unit but it wanted its Dutch rival to buy O2’s German business because of competition issues.

These talks collapsed because the Dutch could not agree with the Germans on a valuation for O2’s German business but almost everyone thought Deutsche
Telekom would return.

However, people close to Deutsche Telekom on Monday said the group would have to take a serious look at making a counter-offer, in spite of the competition concerns. Also, they warned the group would require board approval to make a cash offer for O2, which could take a while.

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