Hutchison to buy Telefonica UK unit for $15.4 billion
By Julien Toyer and Denny Thomas
MADRID/HONG KONG (Reuters) - Li Ka-shing's Hutchison Whampoa Ltd 0013.HK has agreed to buy Telefonica's (TEF.MC: Quote) British mobile unit O2 for up to 10.25 billion pounds ($15.4 billion), hastening the consolidation of Britain's telecoms industry.
Hutchison already operates the Three Mobile network in Britain, and buying second-ranked O2, which has about 22 million subscribers, from the Spanish group will make it the top mobile operator in the country.
The move comes only weeks after former state monopoly BT (BT.L: Quote) 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.
The deal is also the boldest bet yet for Asia's richest man, Li Ka-shing, as he revamps his European telecoms business.
Having been in at the start of the mobile revolution in Britain in the 1990s as the founder of Orange, Hutchison returned in 2003 with the launch of its third generation Three network.
However, returns from the Three business, which operates in six European countries, have lagged other parts of Li's ports-to-property empire.
For Telefonica, the deal marks a key step in the reorganisation of its business started two-and-a-half years ago and that has seen the company shedding non-core operations to focus on its biggest markets Spain, Brazil and Germany.
The Hutchison offer values O2 UK at about 7.5 times EBITDA, in line with BT's planned 12.5 billion pound takeover of EE, which was valued at about 8 times. Continued...