Back in January, Telefónica confirmed that it had entered into exclusive talks with Hutchison Whampoa, owner of the Three network, to hammer out the details of a proposed sale of O2 UK. Today, just two months after entering into formal negotiations, the firms revealed that they have now reached a definitive agreement for the acquisition.
Telefónica announced today that it has agreed terms to offload O2 UK to Hutchison Whampoa in a deal worth £10.25 billion. An initial payment of £9.25 billion will be followed by an 'additional deferred payment' of a billion pounds, the timing of which will depend on how quickly the combined company reaches a predefined cash flow threshold.
The deal is still subject to regulatory approval, and given that the acquisition will effectively create a giant 'super-carrier' with more customers than any other in the UK - leapfrogging the current market leader EE - you can certainly expect Ofcom to scrutinize the details of the plans before giving them the green light. Telefónica said today that it expects the regulatory review process to take "up to a year" to complete.
Before entering into talks with Hutchison Whampoa, O2 had discussed the possibility of an acquisition by the UK's largest fixed-line phone and broadband provider, BT, which currently offers no mobile services of its own.
However, BT ultimately decided to jump into bed with EE instead, and remains in exclusive discussions to acquire the carrier from its current owners, a joint venture between Deutsche Telekom and Orange.