The prospects of O2 securing a good price for its Airwave communications network seemed to strengthen yesterday when National Grid sold its wireless arm for £2.5 billion to Arqiva.

Subject to competition concerns, Macquarie UK Broadcast Ventures is to merge its Arqiva transmission business with National Grid Wireless, leaving the UK with a single broadcast transmission business.

The £2.5 billion paid by Arqiva — which is majority-owned by Macquarie Communications Infrastructure Group, a listed fund managed by Macquarie Bank Group — represents 19.3 times earnings for the year to the end of March and was above the predicted maximum £2 billion tag.

O2 is expected to use the price as a benchmark for the sale of its Airwave business, investment community sources said. It presents similar attractions in the form of long-term contracts and steady cash flows.

It is understood that Macquarie is circling Airwave, a secure digital radio business used by the emergency services. Other failed bidders for the Grid businesses, including Texas Pacific Group, 3i and Babcock, are also expected to look at Airwave when its prospectus is circulated shortly.

The sale is thought to have been delayed by wrangling with the Government over a key contract with the Home Office.

Despite the obvious fit between Arqiva/Macquarie and National Grid, analysts had thought that competition concerns would rule out the acquisitive Australian group from bidding for the Grid business.

Because of those concerns, the tie-up is to be subject to a 12-month review by the competition authorities, during which time the two businesses will remain separate. It is understood that Arqiva is prepared to dispose of some parts of its asset to appease any concerns.

A spokesman for the group said: “We will abide by any rulings. At the same time we are confident we can work through any competition issues.”

However, Arqiva confirmed that it is taking all the competition risks: the £2.5 billion remains National Grid Wireless’s, regardless of any competition hitches. That has led some in the investment community to question the higher-than-expected bid.

In its case to the authorities, Arqiva is expected to highlight that access to transmission networks is governed by an “open-access” regime overseen by Ofcom.

National Grid said that the sale proceeds would be used to paydown its £11.8 billion debt and for a £1.8 billion return to shareholders via an existing share buyback programme.

Networkers

National Grid Wireless

- Provides network infrastructure to mobile operators and broadcasters

- Runs 5,000 mobile sites and 750 broadcast towers

- Contracts include O2, Vodafone and T-Mobile

- Operating profit in year to March 2006 of £70 million

O2 Airwave

-Secure digital radio network

-More than 3,000 masts, covering 99 per cent of mainland Britain

-150 contracts, including a £2.9 billion, 19-year contract with the Home Office signed in 2000

- Earnings before interest, tax, depreciation and amortisation were £90million in 2006

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