O2 is a leading mobile phone brand now active in only two European markets of the UK and Germany. It was originally formed from the demerger of the European wireless businesses of UK operator BT in 2001. After several years of strong growth as an independent business it became the subject of multiple takeover bids in 2005, and was eventually acquired by Telefonica. It continues to operate as a distinct unit under the O2 name although it is now a full subsidiary of the Spanish group. It became the leading mobile operator in the UK towards the end of the 2000s after securing exclusive rights for several years to Apple's iPhone, before being overtaken by the newly created EE. The brand ventured into several smaller European markets in the 2000s, such as the Czech Republic and Ireland, but these remained comparatively insignificant, and were later sold. In 2013, O2 merged with rival German operator E-Plus to create the country's single biggest operator with around 43m customers. Two years later, a deal was agreed to sell O2 UK to smaller rival Hutchison 3. However, that arrangement faced significant regulatory hurdles, and was eventually blocked, with the result that O2 UK remained a unit of Telefonica. In 2020, a new deal was agreed with Virgin Media, whereby the two companies would merge under the joint ownership of Telefonica and Virgin Media parent Liberty Global. Germany and the UK are the #3 and #4 markets by revenues for Telefonica at €7.3bn and €6.8bn respectively in 2018. The vast majority of revenues are generated by mobile with only a small fixed line presence in both countries. The main O2 mobile service is partnered by low-cost brands GiffGaff in the UK and Blau in Germany.
Capsule checked 23rd January 2020
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Adbrands Daily Update 7th May 2020: Just a few days after news of negotations first leaked to the media, Spanish telecoms giant Telefonica and media investor Liberty Global have signed off on a deal to merge the UK mobile service O2 with cable giant Virgin Media. Telefonica and Liberty Global will have equal onership of the combined company, with a plan to issue an IPO in 2023. The deal values O2 at £12.7bn and Virgin Media at £18.7bn, including debts. Telefonica has been attempting to divest its UK business for several years, but a previous sale to Hutchison's Three was blocked by regulators. Virgin Media's own mobile business - the former Virgin Mobile - is very small, whereas O2 is the UK's biggest operator with 34m customers. In addition to the branded service it also provides the network for virtual operators Tesco Mobile, Sky Mobile and Giffgaff.
Adbrands Weekly Update 12th Apr 2018: Ads of the Week: "Stay". How about this for a bold concept? A print ad in cinematic form, but hypnotically arresting in both sound and vision. Giffgaff is one of the UK's many challenger mobile brands. Ironically, given the content of the ad, it's owned by regional giant O2/Telefonica - they don't come much bigger than that in Europe - but Giffgaff has been allowed since launch to operate entirely independently from its parent. One such mark of independence has been brand director Tom Rainsford's insistence on doing his own thing when it comes to advertising, without using a big agency. But he picks his collaborators well. Here it's writing team Tom Evans & Olly Courtenay (known as big.small) and director Ed Morris, via prodco Rattling Stick. Morris, you'll remember, is a man who knows a thing or two about advertising from his former life at Lowe London in its heyday. But it's still the script that's the star. Fine work.
Adbrands Weekly Update 20th Apr 2017: Ads of the Week: "The Big Swim". New London creative boutique Who Wot Why makes a big splash with this attention-grabbing film for Giffgaff, the pay as you go arm of UK mobile provider O2. The agency was launched last year by a team of creatives ex Wieden & Kennedy London, CP&B and Dare with the aim of making work that is "talked about in the pub by people outside the industry". Their first major campaign looks set to do just that. Spectacular stuff.
Adbrands Weekly Update 27th Oct 2016: Ads of the Week: "The Music Box". Just in time for Halloween, here's an entertaining tale for O2's pay as you go mobile sideline GiffGaff. It's produced inhouse, written and directed by GiffGaff brand director Tom Rainsford, clearly a man with many strings to his bow. Sense, it makes none, but is nevertheless a highly entertaining mash-up of scary sequences, like a greatest hits compilation of the horror genre. Indulge yourself.
Adbrands Weekly Update 12th May 2016: As expected, EU regulators upheld the objections of their UK-based counterparts and blocked the proposed merger of mobile networks O2 and Hutchison Three. "Allowing Hutchison to take over O2 at the terms they proposed would have been bad for UK consumers and bad for the UK mobile sector. The remedies offered by Hutchison were not sufficient to prevent this." It is the latest development in the ongoing tug of war between state regulators and European mobile operators over consolidation. This ban now opens the way for alternative deals. Liberty Global, owner of Virgin Media in the UK as well as other European cable services, was quick to express its interest in O2. Any potential deal there would preserve the status quo of four major suppliers which regulators are so keen to preserve. Meanwhile, Three's owner Hutchison was said to be considering an approach to broadband service Talk Talk.
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