Three's a crowd: Hutchison poised for UK M&A action

28 Nov 2014

Hutchison Whampoa, the owner of Britain’s fourth largest mobile operator, Hutchison 3G UK, is said to be preparing a bid for either EE or O2, the mobile duo that have recently confirmed they are in takeover talks with BT Group. With BT expected to decide on which deal it hopes to pursue in the coming weeks, it is now believed that Hutch could also table a bid for one of the companies by year-end. According to Reuters, citing people familiar with the matter, Hutch is working on the deal with a boutique advisory firm.

For its part, BT is said to favour a deal with EE, the country’s largest mobile operator by subscribers, ahead of a transaction with Telefonica-backed O2, according to a report from Bloomberg, citing sources close to the company. It has also been suggested that Telefonica has designs on a ‘global alliance’ with BT, a notion which may not necessarily appeal to the UK firm.

As previously reported by TeleGeography’s CommsUpdate, earlier this week it was confirmed that UK fixed line incumbent BT Group had entered into talks with O2 owner Telefonica and EE parents Orange Group and Deutsche Telekom (DT) as it seeks to re-enter the domestic mobile market. BT quit the wireless sector when it agreed to sell O2 (formerly known as BT Cellnet) to Telefonica in November 2005 for GBP17.7 billion (USD27.9 billion) in cash.

TeleGeography notes that the emergence of Hutch as a genuine takeover contender is likely to prompt BSkyB and Virgin Media – the country’s second and third largest broadband operators by subscribers – to consider their future plans carefully. With BT and Vodafone pressing ahead with fixed-wireless convergence strategies, both ISPs represent plausible bidders for O2.