I feel however that a 'minor' transaction in Germany (not E-Plus) cannot be ruled out. The market is fragmented and any next-generation investment requires a lot more scale than operators currently have. Still, China and Brazil seem more likely areas of interest.
Here are my comments:
- They have been denying explicitly since the summer of 2007. Telefonica has a lot on its mind (China, Italy). Also, you obviously don't want to make the share price of any potential target skyrocket. Anyway, in the long run anything may happen (see this article from last year).
- Europe isn't exactly appealing right now for any large telco to go shopping. Broadband and mobile markets are much more saturated than in most other countries, and regulation is currently under review. Telcos prefer high growth emerging markets, such as those held by TeliaSonera (itself sniffing at Poland's Play) or Telenor (itself looking to Africa). Telefonica is much more likely to focus on Brazil, through Telecom Italia (thanks Stefano).
- Looking at Germany and including Telecom Italia assets, Telefonica already has a significant presence: O2 Germany, Telefonica Deutschland, and (via Telecom Italia) Hansenet. Still, Germany sooner or later will consolidate around DT, Vodafone, Telefonica and the current coalition of freenet/United/Drillisch/Versatel. It doesn't take a genius to predict that the latter grouping could be a target for Telefonica.