O2 UK talks up potential consumer benefits of Hutchison Whampoa buyout

Hutchison Whampoa's plan to acquire O2 UK would benefit consumers by combining two operators that are focused on delivering consumer value, a spokesperson for the UK operator said.

In an apparent bid to offset any regulatory concerns over the proposed merger, which would reduce the number of mobile network operators in the UK from four to three, the O2 UK spokesperson told FierceWireless:Europe that there are clear synergies between the company and Hutchison's local Three UK business, including their strong consumer focus.

"We await the outcome of Telefónica's exclusive negotiations with Hutchison Whampoa. Subject to agreement as a result of these negotiations and any necessary approvals including merger clearance, this will strengthen our future as a leading, and highly trusted UK communications provider at a time when the demand for mobile connectivity has never been greater," the spokesperson noted in an emailed statement.

The spokesperson added that Three UK is as renowned as O2 for "campaigning on behalf of its customers," and that the company is "confident that an agreement will mutually benefit the customers of both companies, as well as drive better value, quality and investment in one of the most digitally competitive countries in the world."

Telefónica and Hutchison Whampoa confirmed this morning that they have entered into exclusive talks regarding the Spanish incumbent's UK operation, ending speculation that a deal is in the works.

The Spanish operator stated that the companies are discussing a cash deal worth a total of £10.25 billion (€13.6 billion/$15.3 billion), comprised of an initial payment of £9.25 billion to be paid on the closing of the deal and an additional deferred payment of £1 billion.

Terms of the agreement mean exclusive talks will last for "several weeks" during which time Telefónica and Hutchison Whampoa will continue to negotiate and handle due diligence processes regarding O2 UK, Telefónica explained.

In a related statement, Hutchison Whampoa noted the additional £1 billion payment would be payable "after the cumulative cash flow of the combined businesses of Hutchison 3G UK Limited and O2 UK has reached an agreed threshold."

Telefónica said the exclusive talks mark another step in its bid to transform itself into a leading digital telecoms company. The Spanish company last year brokered a similar deal with Hutchison Whampoa covering the sale of its O2 Ireland business, while at the same time it built up its assets in Germany by acquiring E-Plus from KPN--a deal that created Germany's largest operator by subscriber numbers.

For more:
- read this Telefónica statement
- view Hutchison Whampoa's announcement

Related Articles:
Hutchison Whampoa faces fight with BSkyB, TalkTalk to acquire O2 UK from Telefónica
Telefónica courted by Hutchison Whampoa regarding O2 UK sale
Hutchison Whampoa owner restructures group to improve value
BT's plan to buy EE raises questions about O2's future
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