Hutchison Whampoa, the parent company of UK mobile operator Three, has entered exclusive negotiations with Telefónica about buying its UK subsidiary O2 for a total of £10.25 billion (€13.42 billion), it has confirmed.
The news follows reports earlier this week linking Sky and O2, with the UK satellite TV provider having reportedly held discussions about partnering with the mobile operator in order to move into the quad-play space.
According to Hutchison, it is now in talks about buying O2 for an indicative price of £9.25 billion, which would be paid in cash at closing, with deferred interest sharing payments of up to £1 billion to be paid when the cash flow of the combined business reaches an agreed threshold.
“The transaction remains subject to satisfactory due diligence over O2 UK, agreement on terms and signing of definitive agreements, and obtaining required corporate and regulatory approvals. The negotiations may or may not result in any transaction,” said Hutchison.
Last month BT said that it is in exclusive talks to acquire the UK’s leading mobile operator EE in a deal worth £12.5 billion (€15.8 billion). BT had been widely expected to make a bid for either O2 or EE and re-enter the UK mobile market, building on its launch of fibre services and aggressive entry into the UK pay TV market.