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Three to buy O2 for £10 billion

Hutchison and O2 logos

Hutchison Whampoa deal will take UK operators from four to three

Little more than a month after we learned that BT is planning to take over EE, another mobile phone operator is up for grabs. This time, it’s O2’s turn, and the interested party is Hong Kong’s Hutchison Whampoa, owner of the Three network.

Hutchison is in talks to buy the company from Spain’s Telefónica. The potential $15.4bn (about £10bn) deal would create the UK’s largest mobile network, with around 35 million subscribers – putting it ahead of current leader EE’s 26 million.

The takeover offer shows further consolidation in the UK mobile market. After the merger of Orange and T-Mobile to create EE in 2010, the number of UK phone operators dropped from five to four, and if the Hutchison deal goes through there will be just three UK operators.

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For this reason the deal will certainly be under scrutiny from the UK and EU competition authorities, but Hutchison Whampoa isn’t particularly worried. Its group finance director Frank Sixt gave the example of Ireland, where Hutchison took over O2 last year. Ireland is a much smaller country than the UK with a correspondingly smaller mobile phone market, however, so we don’t feel a direct comparison can be made.

The deal would also have an effect on the virtual mobile operators which use O2’s infrastructure, such as popular community-owned network Giffgaff, which has just launched its own 4G service. 

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