Analysts have valued T-Mobile UK at EUR4.2 billion – slightly above earlier forecasts – and said the business would be value-accretive if it were bought by a UK rival, reports Reuters. “We estimate value creation for Vodafone and O2 to be EUR6 billion and for France Telecom about EUR5 billion were they to purchase T-Mobile UK,” Bernstein Research analyst Robin Bienenstock wrote in a research note. “This does not include T-Mobile UK tax assets which we believe to be worth about £2 billion.” Another analyst, Andrew Hogley at Execution, said he valued T-Mobile UK at EUR4.2 billion, adding that parent company Deutsche Telekom would want to realise proceeds of over EUR5 billion.

According to a Financial Times report last week the German firm is in talks with Vodafone, France Telecom (Orange) and Telefonica (O2) over a sale of its UK unit, although negotiations are understood to be at a preliminary stage. Sources have said the recent uplift in the UK economy had raised hopes that the business could fetch EUR4 billion; the unit was valued at around EUR3.5 billion when a sale was first touted at the end of June. However, Reuters notes today that an acquisition on this scale would still be difficult in the current M&A market, and warned that a UK rival would also need to take into account the risk that a deal could be blocked by the UK’s competition regulator. Deutsche Telekom installed a new managing director (Richard Moat) at the unit in June and has pledged to turn around the business. It has appointed JP Morgan to conduct a strategic review of the business, assessing the company’s stand-alone options as well as the viability of a sale.