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Hutchison Whampoa purchase of 02 will speed up UK mobile phone consolidation

Hutchison Whampoa purchase of 02 will speed up UK mobile phone consolidation
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Hong Kong tycoon Li Ka-shing is dialing up his stake in the British telecoms market as his Hutchison Whampoa company moves to buy mobile phone business O2.

Spain’s Telefonica is selling it for the equivalent of 13.72 billion euros.

Hutchison Whampoa already owns the Three Mobile network in the UK, so this purchase will make it number one there and speeds up the consolidation of Britain’s telecoms industry.

O2 is ranked second in that market with around 22 million subscribers.

Shares of Vodafone and British Telecom jumped as there will be less competition in the UK market.

While the deal will attract scrutiny from competition authorities, European regulators have allowed the number of telecoms operators in countries including Austria and Ireland to shrink from four to three through mergers and acquisitions.

“The European Commission has taken a positive view of four- to-three consolidations of mobile in three cases now…and we believe that the precedents that they have set in those transactions will apply for this transaction,” Frank Sixt, Hutchison’s group finance director, told reporters.

However British regulator Ofcom, which has been keen to retain four national players, could force a combined Three and O2 to give up some airwaves, and offer good terms for mobile virtual network operators to enhance competition.

The move comes only weeks after former state monopoly BT entered exclusive talks with the owners of EE, Britain’s biggest mobile operator to create a dominant provider of fixed and mobile phones and internet services. BT opted for EE rather than buying O2.

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