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Three set to bid for O2 as UK telecom market merges

Chris Martin | Jan. 20, 2015
Three could be about to buy O2 in the UK as part of another telecoms deal.

The owners of U.K. mobile network, Three, are thought to be preparing a bid for rival O2. 

Following BT's announcement that it will acquire EE, the U.K.'s largest network, it seems more moves in the telecom industry are poised. According to the Sunday Times, Three's owner, Hutchison Whampoa, is in the early stages of discussion to buy O2 from Telefonica.

Hutchison Whampoa is controlled by the Hong Kong tycoon Li Ka-shing and the report suggests a bid as high as £9bn is being proposed. That's less than BT's £12.5bn buyout of EE but the firm has more customers and a larger 4G infrastructure. 

It is thought that Telefonica may be looking to exit the U.K. market to pay off debts.

BT was initially eyeing up O2 as a potential deal last year but EE then entered the frame so the firm had the pick of the two. EE might have been a better deal for Three since with an existing network sharing deal in place and the same with BT and O2 but it looks like that wasn't enough to swing it.

Hutchison Whampoa does have history with O2 though, as it purchased O2 Ireland back in 2013. 

One of the big questions is what is happening to competition in the U.K. telecoms market as if this deal goes through, four out of five successful bidders in the 4G spectrum auction will have merged. Ofcom effectively guaranteed Three 4G spectrum in fear of reducing the number of operators.

There are a number of other operators such as Tesco Mobile, GiffGaff, Virgin Mobile and others but they run virtual networks so deals could well change with the BT, EE and Three, O2 acquisitions.

 

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