Hutchison Whampoa O2 Bid Confirmed at £10.25bn

three logoThree owner Hutchison Whampoa has confirmed its bid for Telefonicas O2, offering £10.25bn for the firms UK mobile unit, as Sky and TalkTalk also prepare official acquisition attempts.

If Hutchison acquires O2, its combined operations with Three will make it the top operator in the country, overtaking EE, who currently rank as the top by market share.

While an acquisition by Hutchison would reduce the UK mobile network market from four to three operators, Sky and TalkTalks bids represent the growing pressure to become a quad play provider, where one company offers mobile, broadband, television and fixed line services. If BTs current negotiation to acquire EE goes through, they will also enter the quad play market.

“Mergers such as this, and BTs acquisition of EE, show how traditional telecoms operators are seeking out opportunities to horizontally integrate access networks,” said Mark Windle, head of marketing at OpenCloud. “In the broader sense it is mobile, fixed-line, wi-fi all coming together to offer complete and cost-effective connectivity packages.

“Such integration of access networks provides a key opportunity to accelerate the decoupling of their service and access divisions. In doing this, operators will be able to deliver any communication service over cellular, IP or wi-fi, based on a customers preference. The separation will allow them to focus on service innovation, similar to competing OTT service providers.”

Hutchisons bid may be strengthened by already owning O2 operations in Ireland, which it acquired in June 2013 for €780m (£584m).