Wednesday , 19 September 2018
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Hutchison offers plan to keep 3, O2 separate after takeover

Hutchison offers plan to keep 3, O2 separate after takeover

CK Hutchison has confirmed plans to keep the 3 and O2 UK businesses separate after its takeover of O2, in order to gain regulatory approval for the takeover of O2 from Telefonica. In its annual earnings report, Hutchison said it was considering the sale of a stake in 3 UK to a new investor in order to help reduce the cash required for the acquisition. If the new investment goes ahead, the group will consider implementing “a revised business structure that would maintain the continuity and separation of the 3 UK and O2 UK businesses”. 

Hutchison said this would be aimed at achieving benefits in terms of operational strategy and focus, regulatory approvals and contractual obligations, while preserving financial and operational efficiencies and savings expected from the acquisition of O2 UK. In May last year, shortly after first agreeing the O2 takeover, Hutchison announced a deal to sell a 33 percent stake in the combined business to five institutional investors GBP 3.1 billion. The above agreements are conditional on securing regulatory approval for the O2 takeover, which is still pending at the European Commission. 

The EC and Ofcom have reportedly pushed for the company to support a fourth network in the UK after acquiring O2. The merger of O2 and 3 would otherwise reduce the UK to three networks. According to the latest media reports, Hutchison considers the EC proposal unworkable and is instead proposing an offer of permanent access to a share of its network or even partial ownership of the network for one or more new players in the UK market.  

At a press conference on its results, Hutchison was reluctant to offer further details on the plan, ahead of a decision by the EC expected in April. The company said it has submitted its proposal to the Commission and is still in talks on the details. 

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