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11/22/2024 01:24:35 am

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Three UK To Acquire O2 In US$15B Deal

O2

(Photo : REUTERS / Suzanne Plunkett) A sign hangs outside an O2 mobile phone shop in central London January 23, 2015.

Three UK has announced it will be acquiring O2 for £10 billion (US$15 billion) earlier this week, in a move to tie up the second largest UK carrier from any other potential buyouts.

The merger of the subscriber numbers would make Three UK the largest carrier in Britain, beating EE's 26 million subscribers by seven million. Three UK is currently fourth in the subscriber race at nine million.

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The latest deal follows BT Group's £12.5 billion (US$18.6 billion) acquisition of EE late last year.

Even though Three UK is not that big of a brand name, its parent Hutchison Whampoa has all the money available to facilitate this deal. Spanish telecommunications giant Telefonica also announced the deal had been finalized, removing its hold of O2 in the UK.

Telefonica acquired O2 in 2005 from BT Group for £17.7 billion (US$26 billion), but has not managed to make good on the investment. Losing £7 billion (US$10 billion) a decade later.

The mergers and acquisitions in the wireless market are all to do with the "quad play" bundle telecommunications companies are trying to achieve. By offering landline, TV, broadband and wireless, it will secure customers into an ecosystem that it hard to remove.

Of course, the Three UK deal puts a spanner in the works, since neither Three or O2 offer any landline, broadband or TV services. O2 is a partner of Sky's mobile virtual network operator however, meaning it provides networking to all Sky's quad play bundle to work.

This looks to be the last major acquisition, unless Vodafone fancies acquiring Virgin Media from Liberty Global. In the last investor conference, Vodafone's CEO Vittorio Colao said this was off the cards.

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