MmO2 and KPN in merger talks?

NEWS Mobile network operator mmO2 and Dutch telco KPN have been in negotiations about a possible merger of certain of their operations but the talks have stalled. According to this morning's FT, it is possible the two companies will combine their German operations. The O2 network in Germany, bought as Viag Interkom by BT, and E-Plus, KPN's concern, occupy the fourth and third market positions respectively in that market. The companies have not officially confirmed the negotiations but the FT cites a KPN source as saying: "We are not in a hurry. It is more likely that we are going to be a survivor than O2." Although since its demerger from BT a year ago mmO2 has been touted as a takeover target - Spain's Telefonica has frequently been put in the frame - the company yesterday revealed decent results, showing it turned cashflow positive during the first half of its fiscal year. For the six month period revenues were also up 16.3 per cent, though there was still a loss of £277m.