Hutchison Whampoa to announce O2 deal this week

(Image Credit: iStockPhoto/Prykhodov)

Just yesterday we reported of BT's intention to launch 4G services this week using EE's network under an MVNO agreement ahead of a full acquisition of the UK's largest mobile network. Now we're hearing that Hutchison Whampoa, owner of 3 UK, is set to announce a merger with Telefonica-owned O2 this week.

Hutchison Whampoa has put £9.25 billion in cash on the table

The deal would follow months of speculation and exclusive talks between the two companies since back in January. It is thought such a merger, which would consolidate the market to just three players, would raise some flags with regulatory bodies. 

Despite this, these ongoing talks have reportedly not uncovered any major obstacles and therefore the announcement could be made soon. If the deal passes regulation, it would make Three leap from the smallest mobile operator in the UK to the biggest. According to Enders Analysis, O2 and 3 are expected to save £250 million annually by only having to invest in one network. 

Telefonica has been looking to sell O2 in the UK for some time in order to help alleviate some of its current huge debts and allow them to focus and invest in other markets, such as their own in Spain. Sources close to the matter report that Hutchison Whampoa has put £9.25 billion in cash on the table to take control of O2 and that a further £1 billion in deferred payments would be made when cash flow targets are met. 

Investors from around China, Singapore, and the Middle East have been also in discussions with the two companies and are prepared to offer "billions of pounds" into what would become the UK's biggest network in returned for a stake of up to 30% in the resulting operator. 

Hutchison might have a chance at getting the deal past regulatory bodies due to Sky recently announcing that it will be launching its own mobile network in 2016 after signing a deal with O2. This would allow Sky to compete with BT, and consumers will benefit from true quad-play packages which can offer broadband, cellular, landline, and TV services. 

Do you think Three should be allowed to merge with O2? Let us know in the comments.

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