Insight

3 and O2 become 1

By Charlie Knight |

 

News released yesterday is that Hutchison Whampoa, the Hong Kong conglomerate, has finalised a deal to purchase British operator O2 from Telefonica. Like the BT/EE merger, it is yet another example of consolidation in the European telecommunications market. It is however a completely different kettle of fish, built on different motivators with an entirely different set of consequences for telecoms recruitment both in Europe and across the globe.

The deal

Hutchison Whampoa will buy O2 UK from Spain’s Telefonica for £10.25 billion ($15.2 billion), confirming reports from earlier this year. The payment will be split into an initial £9.25 billion followed by another £1 billion once the newly formed company’s cash flow reaches an agreed threshold.

Negotiations between the two companies started in January and, having completed due diligence, has now been finalised. However, the deal is still subject to regulatory approval which many see as a potential stumbling block.

The merger will reduce the number of players in the UK mobile market from four to three. While it isn’t expected that this will stop the deal, it is expected to lead to a number of sanctions being placed on Hutchison. Similar deals in Europe have required sanctions such as divesting of spectrum and providing wholesale access to their networks on favourable terms.

Unlike BT’s acquisition of EE, this merger is not concerned with quad-play services. While the merger will create the UKs biggest mobile operator (in terms of customers), neither O2 nor 3 offer anything more than mobile services. It would seem that the plan for Hutchison is that while other companies focus on quad-play, they will be focussing on building the biggest and best mobile network in the UK.

3UK CEO Dave Dyson said of the merger: "3's leadership in mobile data together with O2’s strength on network coverage is a great combination that will bring very real benefits to businesses and consumers throughout the U.K. The highly complementary network assets will deliver market leading coverage and capacity for talk, text and data and will be well placed to satisfy rapidly growing demand."

Having recently acquired Telefonica’s Irish business and Orange Austria Telecommunications GmbH in 2013, Hutchison appears keen to build not only the biggest UK network, but a European telecoms giant. The company is also currently in talks with Italy's Wind Hellas Telecommunications S.A. about a possible merger with 3 Italia.

What it will mean for telecoms recruitment

In the near term, the deal will require a large number of BSS, OSS and change management specialists to effectively merge the two companies and offer O2 and 3 customers a single seamless network provider. With consolidation rife within the telecoms industry, these professionals are already in demand and a war for talent may ensue as companies do everything they can to attract the top talent.

In the long term it will be interesting to see what sanctions the regulators will place on Hutchison. If they are required to offer wholesale access to their network at favourable terms, we may see a surge of MVNOs and those that are already utilising the network may increase their hiring to make the most of the reduced overheads. With Hutchison not muddying the water my trying to offer other services, we may also see other mobile providers looking to beef up their own offering so as not to lose out to the new top dog.

Source: Vine 11


Charlie Knight

Written by Charlie Knight

Charlie has 3 years experience in digital marketing, helping B2B technology companies grow their businesses through inbound marketing before joining Vine Resources as Content Marketing Manager. In his spare time, Charlie enjoys travelling and the great outdoors, and he recently hiked from Mexico to Canada for charity.