Three owner Hutchison Whampoa to buy O2 for £1Obn
Spanish telecoms giant Telefonica is set to pick up more than £10bn by selling O2 to Three’s parent company, Hutchison Whampoa.
Telefonica has been in talks to sell its British mobile business for months. The Hong Kong-based group, which is owned by Asia’s richest man, Li Ka-shing, emerged as a frontrunner to take the company on after discussions concerning a potential £9bn deal between Telefonica and BT fell apart at the end of last year. Telefonica sold its O2 Ireland business to Hutchison in 2013 for €850m (£644m).
The sale, which will see O2 and Three merge, is the second big purchase Li has made in the UK this week, following his £1.1bn takeover of Eversholt Rail Group on Tuesday. Hutchison restructured at the beginning of this year to create two new companies, one of which is to be focused on energy, retail and telecoms.
O2 was acquired by Telefonica in early 2006 and is the second largest company in the British mobile market with around 22m subscribers. Three is the UK’s fourth-largest mobile network. The sector has seen a wave of deal speculation since BT confirmed in December that it was in £12.5bn takeover talks with the UK’s largest network EE.
As UK companies move towards a so-called quad play market with operators offering bundles of mobile, home broadband, telephone and TV, market commentators have warned that deals will face increased scrutiny from the watchdog Ofcom. The regulator has been supportive of the UK mobile operator market containing four major networks.
Telefonica and Hutchison declined to comment.