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Three and O2 deal: Five key things you need to know

Three and O2 deal: Five key things you need to know

Three owner Hutchison Whampoa has officially confirmed that it’s in talks to buy O2.

After a week of rumours and speculation, the company released a statement to the Hong Kong stock exchange laying out its plans for the merger.

We’ve already looked at what that could mean for consumers.

But what are the nuts and bolts of the deal, the second planned mobile merger in two months, after BT announced it was buying EE?

Read on and we’ll tell you the five key things you need to know about the O2 and Three tie up.

Who exactly is buying O2?

O2 Telefonica

Although the deal is being heralded as Three taking over O2, in fact it’s Three’s parent company, Hutchison Whampoa, that is looking to snap up the one–time BT–owned network.

That firm is owned by Asia’s richest man, Li Ka–Shing, who is said to be worth over £20 billion.

Hutchison Whampoa is based in Hong Kong, hence it made its statement about the takeover there, rather than in London.

How much?

scrooge mcduck money

Hutchison Whampoa says it will pay £9.25 billion in cash for O2.

A further £1 billion will be paid when the combined business of Three UK and O2 makes a set amount of money, which has not been revealed.

It prices O2 at less than the £12.5 billion BT is paying for EE, but then the network is smaller and doesn’t have the same 4G infrastructure.

What will the network be called?

phone masts

It’s not yet clear whether Three and O2 will become one network, as EE did when Orange and T–Mobile came together in 2010.

However, Hutchison Whampoa is in the process of ditching the name of O2 in Ireland.

It bought the network there for £1 billion in 2013.

That suggests that Three will become the final name for the merged network, making it the UK’s largest and ending its underdog status.

Is the deal final?

contract handshake

No. As with all mergers, this is just the start. Hutchison Whampoa has said nothing is final, although it has entered into an exclusivity agreement with O2 owner Telefonica.

That suggests that any tie up is more than likely to be agreed between the companies. But that’s not to say everything will be signed off without any word from governments and regulators.

What obstacles are there?

EU flag (banner)

Because Hutchison Whampoa makes most of its money outside of the UK, it will be European regulators rather than Ofcom that studies the deal.

They’ll be expected to take a stringent look at whether a merger will be good for consumers, or if it’ll lead to an upsurge in prices.

Hutchison Whampoa’s finance director has told the BBC that he doesn’t expect any problems from the European Commission, with Ireland and Austria already down to three mobile operators.

However, that won’t calm any fears that bills could go up once a deal is done.

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