The consolidation of the UK mobile network operator (MNO) space could be about to step up a gear, after it emerged Spanish telco Telefónica has entered preliminary talks to sell O2 to Hutchison Whampoa, the owner of the Three network.
Debt-ridden Telefónica has been looking to divest itself of O2 for some time and entered preliminary discussions to sell up to BT in late 2014.
However, it was beaten to the punch by EE, which presented a more attractive target to BT, and subsequently entered talks to be acquired by the telco for £12.5bn just before Christmas.
The latest set of private talks are at an early stage, with no certainty of a deal being struck, according to the Sunday Times, which first reported the rumours.
If it goes through, subject to approval from the regulators, it could see Hong Kong-based conglomerate Hutchison Whampoa fork out as much as £9bn for the operator. It would also create the UK’s largest mobile network. Three also bought O2 in Ireland in 2013, for €780m.
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Hutchison Whampoa first let it be known it was considering buying an MNO in the UK just before Christmas 2014, when the leaky ship revealed it might consider a bid for either EE or O2 depending on which of the two BT decided to buy.
At the time, O2 chief executive Ronan Dunne said that a merger between O2 and Three was the “least likely” outcome in the scenario.
It now appears that following BT’s move to buy EE – the details of which are still being hammered out – Hutchison Whampoa has stuck its head over the parapet once again.
Li Ka-shing, the billionaire owner of Hutchison Whampoa and Cheung Kung Holdings, is currently reorganising both firms to target more European expansion.
Besides Three, Ka-shing’s UK holdings include pharmaceuticals retailer Superdrug and a number of utilities.