Hutchison Whampoa owner Li Ka-shing has finished browsing, and is now finalising his purchase of Britain’s second-largest mobile operator O2, for the sum of £10.25bn.
After two months of exclusive negotiations and due diligence, Hutchison Whampoa - which owns O2’s rival operator Three - has agreed final terms with O2’s Spanish parent Telefonica. In his biggest deal yet, Hong Kong business magnate Ka-shing will reduce the number of UK wireless networks from four to three, creating a merged network that will dominate 40% of the market.
The new acquisition will form Britain’s biggest mobile operator, cementing the 86 year old billionaire’s business as one of Europe’s leading wireless providers. The conglomerate would be positioned well ahead of EE with some 31m customers, almost triple the number of Three’s UK’s subscribers.
In the first instance, Hutchison will pay £9.25bn and later upto £1bn if the operation meets a cash flow target – no amount Asia’s richest man can’t handle.
The telecom and infrastructure company, of which tycoon Ka-shing is Chairman, was the first to build 3G networks in the UK (back in 2003) but until 2010, Three was ailing. As consumers’ use of smartphone and tablet data began to rise, Three at last began to turn profits, with more and more customers persuaded to sign up for its cheaper-than-competitors service plans.
The deal “will create a business with unmatched scale and strength that will allow us to better compete against other operators in the marketplace,” said Canning Fok, Hutchison’s Group Managing Director, said in a statement. “This very significant investment for Hutchison also reflects our continued confidence in the U.K. economy and its commitment to maintain and foster a dynamic telecommunications sector” he added.
As the choice of mobile operators looks to be lessened, Ronan Dunne, Chief Executive of O2, cited that the merger “will result in the creation of the most customer-centric mobile operator in the UK.”