The Hong-Kong based group has entered exclusive talks to buy O2, which is the UK’s second biggest mobile phone operator after market leader EE. O2 is being sold by Spain’s Telefonica after BT spurned the chance to buy the business in favour of EE.
Tycoon Li Ka-Shing’s Hutchison group said it had entered talks “over a period of several weeks” to buy O2 for £9.25bn in cash followed by deferred payments of up to £1bn. Telefonica confirmed the talks, saying the deal marks another step in its transformation process which it said would allow the company to strengthen its financial flexibility.
Industry figures from Espirito Santo show EE as the biggest of the mobile phone players with 35.2 per cent of the market followed by O2 on 28.5 per cent.
O2’s share with Three’s 8.4 per cent share would see the combined firm climb to first place.
Hutchison said the deal is subject to due diligence over O2, agreement on terms and signing of agreements, and obtaining the required corporate and regulatory approvals.
The proposed deal comes a month after BT said it had entered exclusive talks over a £12.5bn deal to buy EE.
Telefonica snapped up O2 for £17.7bn in 2005. The business had been spun off from BT in 2001.
Its proposed takeover by Hutchison comes as Europe’s telecoms firms jostle to reposition themselves amid a consolidation in the sector, with BT’s move on EE focusing on a convergence between fixed and mobile ser- vices.
Vodafone, the number three player in the mobile market, has outlined plans to offer broadband services and has been subject to speculation that it has designs on Sky to strengthen its position in the UK.