Telefonica sells O2 Ireland to Hutch in USD1.1bn deal

24 Jun 2013

Reports say that Spanish giant Telefonica has agreed a deal to sell its Irish mobile operation O2 Ireland to Hong Kong-based Hutchison Whampoa – and owner of the Republic’s fourth largest cellco 3 Ireland – for as much as EUR850 million (USD1.1 billion). With the Madrid-based group looking to reduce its sizeable debt pile, Bloomberg notes that under the deal Hutch will pay out EUR780 million in cash for the carrier, with a top-up of EUR70 million to follow – subject to O2 Ireland achieving ‘certain performance targets’. The transaction, which is subject to regulatory approval, will help Europe’s most indebted telecoms carrier to move closer to its goal of reducing debt to below EUR47 billion this year, from about EUR51.2 billion.

The Hong Kong parent has been interested in expanding its market position in Ireland for some time. TeleGeography’s GlobalComms Database writes that in May 2012 Hutch submitted an unsuccessful EUR2 billion bid for Ireland’s troubled former monopoly Eircom, which was then under the court’s protection as it looked to restructure its way out of examinership status. Billionaire Li Ka-shing’s ‘conditional non-binding offer’ for the telco was rejected by the court-appointed examiner Michael McAteer though, following which the carrier issued a statement confirming the approach but adding that the examiner decided not to proceed, given ‘the level of the offer and its conditionality’.

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