Three UK has announced it will be acquiring O2 from Telefonica for £10 billion.
It follows months of negotiations between Three UK’s parent Hutchison Whampoa and Telefonica over the UK carrier. Three acquired O2 Ireland two years ago; this is a continuation of the push by Three into Britain.
Combined, Three UK and O2 will have the largest subscriber base in the UK with 33 million. Neither Three or O2 commented on what brand the carrier will take once the acquisition is finalised, although Three UK is most likely.
Telefonica acquired O2 from BT Group for £17.7 billion in 2005, but have not made good on the investment. The UK carrier market is a lot more competitive nowadays and Telefonica is not making a lot of profit from the O2 UK venture.
Three UK will be able to make use of O2’s stronger 4G LTE network, alongside the various deals and sponsorships O2 hold in the UK. Features like O2 Priority and Rewards might be removed, unless Three is planning to continue the reward schemes.
The UK carrier market is hot for acquisitions and partnerships, with BT Group announcing a £12.5 billion acquisition of EE last year. Sky has set up a mobile virtual network operator, utilising Vodafone and O2 network, to offer quad-play bundles.
There were rumours that Vodafone was in talks with Virgin Media’s parent Liberty Global over an acquisition, but CEO Vittorio Colao refuted these claims.
The move might be subject to Ofcom inspection, considering the move gives Three UK a large advantage in the mobile market. Considering Three UK is fourth on carrier subscribers, it will most likely not be stopped by regulation.
Wireless and broadband acquisitions appear to be happening all across the globe, with Comcast and Time Warner Cable attempting to merge for $45 billion (£30 billion) and AT&T trying to acquire DirecTV for a similar amount.