CK Hutchison will not offer additional concessions to secure O2 UK acquisition

21 Apr 2016

Hong Kong’s CK Hutchison will offer no further concessions in order to gain regulatory approval for its proposed acquisition of British mobile network operator O2 UK, Reuters reports, citing two sources familiar with the matter. Amid continued speculation that the European Commission (EC) is likely to nix the planned purchase, one of the sources was cited as saying: ‘Hutchison has gone out of its way to offer substantial remedies for the O2 deal. It will fight in court if EU regulators want to block the deal.’ A final decision on the matter from the EU antitrust watchdog is expected by 19 May.

Meanwhile, O2 UK’s current owner, Spanish telecoms giant Telefonica, is said to be increasingly concerned regarding the fate of the deal, and is already considering alternative options as it looks to cut debt and appease ratings agencies should it fall through. To that end, while a fire sale of O2 UK or a dividend cut are said to have been ruled out, one strategic option for the company’s British unit is a possible merger with another UK player, such as Sky or TalkTalk. Bloomberg meanwhile claims that another option is a spinoff of a publicly traded O2. Further, to buy time and mitigate the damage should the Hutchison deal fail to progress, Telefonica is also said to be moving forward with plans to spin off the Telxius wireless towers group it created in February; it has been suggested an IPO of this group could bring in around USD4 billion.

United Kingdom, CK Hutchison, Hutchison 3G UK (Three UK), O2 UK, Telefonica