Hutchison to sell 33pc of UK mobile arm for £3.1bn to fund O2 deal


Five global investors to purchase stake in the Three-O2 combined business as telecoms group ramps up plans for the acquisition

Three parent company Hutchison Whampoa is selling one-third of its UK mobile business for £3.1 billion to help fund its acquisition of O2 UK.

Five investors will acquire stakes in the combined Three and O2 business. Their investments are conditional on and will occur concurrently with completion by Three of the acquisition of O2 from Telefonica. This, along with a bank loan of £6 billion, will help fund the £10.25 billion purchase.

Canada Pension Fund and Singapore’s GIC will each invest £1.1 billion, with the remaining £900 million coming from Abu Dhabi Investment Authority, CDPQ of Quebec, Canada and Brazilian Banking Group BTG Pactual.

Hutchison Whampoa group managing director Canning Fok said: “It is an honour to have such a strong collection of the world’s largest and most sophisticated investors joining us as partners in building the combined business of Three and O2 UK, which will be the number 1 mobile operator in the UK with nearly 33 million customers.

“The investors share our vision and belief in the value of creating a business with the necessary scale to enable us to compete effectively in the UK marketplace and to provide even better service and innovation using the largest and most resilient and advanced mobile network infrastructure in the country.

“Like us, the willingness of these investors to commit substantial capital to this investment reflects continued confidence in the UK economy and its commitment to maintain and foster a dynamic and world leading telecommunications sector, as well as a vote of confidence in Europe’s plans for a single market in digital communications, leading to increased investment in the telecoms sector.”

In January, the Hong Kong-based company entered into exclusive talks with O2 parent company Telefonica, with definitive terms on the deal reached between the two companies on March 25.

Hutchison will pay Telefonica an initial £9.25 billion, with a deferred payment of £1 billion to be paid once the combined cashflow of Three and O2 has reached an undisclosed amount. The acquisition is subject to EU Competition approvals, which could take up to a year to complete.