The vultures begin to circle as BT's mobile arm floats

NEWS BT's mobile arm, mmo2, is set to float on the London Stock Exchange and is a recommended "buy", according to Merrill Lynch. But analysts are warning that the relatively small company could be a tempting takeover target if things go awry. mmO2 shares hit a high of 0.85p on Thursday 15 November on the 'grey market' - the market on which shares can be traded before their full listing - but dropped slightly by 2.93 per cent this afternoon to 0.80p. There are 8.65bn shares in circulation, giving the company a market capitalisation of £7.35bn as it stands today. Victoria Granger, Merrill Lynch analyst, said: "Today's share price suggests mm02's superior growth prospects are currently outweighed by perceived risks. Expectations are fairly low as second quarter subscribers were very light." Mark Blowers, senior research analyst at the Butler Group, claimed mmO2 will be ripe for plucking by Monday. He said: "mmO2 is vulnerable now as it is fairly small fry in comparison to the other mobile telcos out there. "Talk of consolidation in the market is strong and anyone who wants to strengthen their European customer base will be right to take mmO2 over." mmO2 is set to replace United Business Media in the FTSE 100, which is now the smallest company on the index with a market value of £1.8bn. BT chairman Sir Christopher Bland has staked his future on the success of the flotation after threatening to leave the company if it failed.