Hong Kong based company Hutchison Whampoa Ltd has entered into “exclusive negotiations” with Telefónica with a view to buying it’s UK subsidiary network O2. The move won’t come as a surprise to some, with rumour of a possible sale floating around for the past few weeks.
The purchase would mean that Three would move from being the smallest of the four major networks in the UK up to one of the largest rivalling Orange and T-Mobile partnership EE, and coming close to Vodafone.
This still leaves questions as to how the company would get a foot in the quad-play door. With British Telecom taking steps to purchase EE, and Vodafone looking at providing TV services as well as landline connectiuons, quad-play seems to be the latest offering. Neither O2 or Three have announced intentions to offer any such services.
Whatever the future may hold for O2 and Three, the move can only be seen as a sign of Three’s growing strength in the market since it’s inception in March 2003. A purchase of O2 would increase the power of Three not only for customer base, but network spectrum and real estate too.
The UK mobile industry has seen some major changes over the past few years with the merger of T-Mobile and Orange creating the EE network, supermarket chains Asda, Sainsbury and Tesco launching their own MVNOs.
The mobile retail industry also saw a busy 2014 with Carphone Warehouse merging with Dixons and going on to buy PC World and Currys to form the largest consumer electronics retail group in the UK. On the reverse side Phones 4 U, who posted a £1bn turnover in 2014, were forced in to administration after Vodafone and EE stopped selling their tariffs via the retailer.
Nothing is confirmed as the two companies enter into a stage of due diligence before submitting their plans to the European Commission, but if the sale goes through – rumoured to be in the £10bn price range – it will certainly mean another major shake up in an already busy industry.