Hutchison Whampoa buying out O2, creating largest carrier in UK

24 Mar 2015

Following months of due diligence, Hong Kong-based Hutchison Whampoa is close to buying out O2, with the number of Britain’s mobile providers dropping from four to three.

Li Ka-shing’s group, which operate Three in the UK, is expected to pay UK£10.5bn for Telefonica’s network, before merging the two carriers together.

Hutchison claims it is still in “exclusive negotiations” for the purchase, however the Financial Times is reporting that the deal will be done early this week, as soon as today.

The merging of Three with O2 isn’t the first major change in the UK’s carrier industry in recent months.

Back in December BT – which previously owned O2, actually – bought Everything Everywhere, Deutsche Telekom and Orange’s 4g network, for UK£12.5bn. BT has now positioned itself strongly in the broadband and telecoms arena through the deal, while Three and O2 combined will make a formidable mobile only group.

These moves paint the picture of growing consolidation in the UK market, and indeed elsewhere in Europe.

Fears that merging Three and O2 – therefore reducing the mobile networks of choice from four to three – could be restrictive and reduce competition in the eyes of the EU have been dismissed by the Financial Times.

“Similar deals have been passed by the Brussels competition regulator in Germany, Ireland and Austria, albeit with some concessions to help rival services flourish,” it says.

It looks like the main loser in all of this is Vodafone, which has a network sharing agreement with O2, at the moment. Late last year the company was rumoured to be buying Liberty Global in what would have been a UK£40bn deal that would have changed the face of the UK telecomms industry. Nothing came of it, in the end.

Telecomms image, via Shutterstock

Gordon Hunt was a journalist with Silicon Republic