Telefonica set to finalise O2 sale for £10.25bn

The O2-Hutchison Whampoa deal, set to be finalised in the near future, will create the UK’s largest mobile group.

Hutchison Whampoa has reached a “definitive agreement” with Telefonica to buy its O2 mobile phone network for £10.25 billion, in a move that will create the UK’s biggest mobile operator.

The decision follows on from weeks of negotiations that were first announced in late January, and is the latest buy in a spending spree by Li Ka-shing, owner of Hutchison Whampoa.

The deal will merge O2 with Three, the UK’s smallest operator; together they will become the largest mobile group in Britain, with a market share just over 40 per cent. Current leaders, EE, have a 29 per cent market share.

Changing the mobile market landscape

Completion of the deal largely relies upon receiving regulatory approval which could take up to twelve months.

The joining of Telefonica’s O2 and Hutchison Whampoa’s Three would change the landscape of the mobile market in the UK, while creating a headache for industry regulators. Ofcom wants at least four competitors in the mobile industry in order to keep prices favourable for consumers.

However, as Three is currently one of the cheapest mobile operators, the move could shake-up the market.

The most customer-centric mobile operator

It is thought that if the deal is accepted, Ofcom will aim to see the combined network give up some of its spectrum, which mobile operators use to broadcast mobile signals. The rest of the spectrum would be offered to other competitors at a low price.

If the merger is approved, it will create the UK’s "most customer-centric mobile operator", according to O2, who also said their customers will enjoy greater value, quality and innovation as a result of the merger.