O2 UK Store

Telefonica Have Agreed to Sell O2 to Owner of Three UK for a Cool £10.25 Billion

March 24, 2015 - Written By Tom Dawson

 

For some time now, we’ve been hearing of changes to the UK wireless market, more so than ever before. Consolidation seems to be a running theme, with BT and EE agreeing to sell the UK’s largest network to British Telecom for a whopping £12.5 Billion. Afterwards, rumors starting swirling surrounding a possible deal between Three UK’s owner, Hutchison Whampoa, and Telefonica, the firm which owns O2 in the UK. Now, the two parties have formally agreed to the deal as per a press release from Telefonica today. The deal, if approved by regulators, will see Telefonica sell O2 to Hutchison Whampoa for a sizable £10.25 Billion.

The deal comprises of an initial £9.25 Billion in cash followed by a further £1 Billion to be paid “once the cumulative cash flow of the combined company in the UK has reached an agreed threshold.” This is most definitely a big deal for the UK market, with BT hoping to seal approval of their purchase of EE and now Three UK and O2 close to joining forces. The marriage of O2 and Three UK would create the largest subscriber base in the UK, and while BT and EE would make a formidable force, the two would have more subscribers and a larger network. Of the big networks, Three stands on its own as the one network offering unlimited data on a vast range of contracts, including SIM-only contracts. Not only that, but Three also offers “Feel-at-Home”, a feature that allows Three customers to roam at no extra cost – including unlimited data – throughout many locations including the United States and starting next month, Spain.

Whether or not the deal between the two keeps these cornerstones of Three’s recent success alive remains to be seen. Regulatory approval could take quite some time, and considering the BT, EE deal is coming under criticism, this deal could be faced with severe scrutiny as well. This deal isn’t exactly surprising, we heard quite some time ago that Telefonica and Hutchison Whampoa were entering extended negotiations and the same price we heard back in January has been agreed upon today. It’s an interesting time for the UK wireless market, with more players than ever getting involved and big deals like these looking to consolidate and expand networks throughout the country.