O2 owner denies bid move from US giant

An AT&T representative told the Spanish government about the company’s plans to buy Telefonica and take on its 52bn euros of debt, leading the state to stop the sale, El Mundo said yesterday, citing sources with knowledge of the deal.

But a Telefonica spokesman said the company “has not received any approach or spoken or written indication of interest”.

The Spanish government has mechanisms to block the sale of any company deemed strategic to the national economy, El Mundo cited sources as saying. According to the paper, the matter was debated in government ministries, as well as in Prime Minister Mariano Rajoy’s office.

AT&T has been looking this year at ways it can grow outside the United States, including via acquisitions and expanding its business serving enterprise customers.

A takeover of Telefonica would make it the biggest telecoms company in the world, with a market capitalisation of almost 300 billion euros.

Debt-laden Telefonica’s revenues have been hit by the economic downturn in Europe, especially in Spain, where 27 per cent of the workforce is unemployed.

O2 employs 2,000 people in Leeds, most of whom are being transferred to Capita.