(Image Credit: William Hook)
UK consumers will soon have less choice when it comes to mobile network if several big acquisitions come to fruition. We reported in November last year of BT’s intention to buy the UK’s biggest mobile network, EE, in a deal worth £12.5bn. This deal would shake-up the market and place BT in the advantageous position of being able to offer the first quad-play solution in the UK.
The operator is already finding it difficult to attract 4G subscribers, and trails its rivals’ numbers.
Hutchison Whampoa, owner of Three UK, has been mulling the idea of acquiring O2 which would give the operator the biggest customer base when combined. That deal is nearing completion, with Telefonica said to be calling in the services of investment bank UBS AG to investigate the viability of a £9bn purchase.
It wouldn’t be the first deal made between Hutchison’s Three and Telefonica’s O2. Three acquired O2 Ireland’s business in June 2013 for €780 million and Telefonica is now looking to pull-out of the UK market to reduce their debt. Merging the two companies’ assets in the UK to prepare for the threat posed by BT and EE is a no-brainer.
The mergers would reduce competition in the UK’s wireless market and leave three major players; BT/EE, Three/O2, and Vodafone.
Despite being one of the largest operators in terms of overall market-share, Vodafone would slip to last place and could find itself struggle against its competition. The operator is already finding it difficult to attract 4G subscribers, and trails its rivals’ numbers. EE is in first place with 4.2 million 4G subscribers, followed by O2 with 2.1 million, Three with 2 million, and Vodafone comes in last place with just 0.9 million subscribed to their 4G services.
In terms of spectrum ownership – BT/EE would lead with a combined 45% share, Vodafone will continue to hold its 28% share, whilst the combined Three/O2 deal would account for 27% of the market to bring the operator on a more-even playing field.
Hutchison is said to feel under no pressure to finalise a deal soon, as the BT/EE acquisition isn’t likely to conclude until 2016. Despite this, the Hong Kong-based company is sure to want to get the jump on their competitor as soon as possible – which could mean a deal is made before the year’s end (subject to regulatory approval.)
Do you think Hutchison should acquire Telefonica’s O2? Let us know in the comments.