Telefónica sells O2 and pulls out of the UK market
Telefónica sells O2 and pulls out of the UK market
SPANISH communications giant Telefónica is about to sell its British holding, O2, and will leave the UK market altogether.
Initial talks with potential O2 buyer, the Hong Kong-based Hutchinson Whampoa Group, have taken place and Telefónica is expected to agree on a sale price of €13.5 billion.
Telefónica's shares went up by over 2% today at the opening of the IBEX-35 as a result of the news, and the purchase is said to have been approved by the Spanish stockmarket regulatory body, the National Values Market Commission (CNMV).
The aim of the sale is for Telefónica to continue to reduce its debts, increase its financial flexibility and consolidate its presence in Europe and Latin America.
CEO César Alierta refers to a 'profound strategic transformation' Telefónica is currently undergoing in a bid to 'consolidate itself as a digital telecomms market leader' whilst 'maintaining an attractive remuneration policy' for shareholders.
Telefónica has already branched out into Germany through its acquisition of E-Plus, and Brazil, through the purchase of GVT.
The Spanish telecommunications firm acquired O2 in 2006 for the sum of 18 billion pounds sterling (€23.7bn in accordance with current exchange rates).
Once it is sold, the union of O2 and Three – also owned by Hutchinson – will become the largest mobile operator in the UK.
Telefónica sold its Irish holding for €850 million in June 2013 to Hutchinson Whampoa to cut its debts, which exceeded €58bn between June 2012 and 2014, and which now stand at €41.3bn.
Hutchinson Whampoa is owned by tycoon Li Ka-shing, considered to be the richest man in Asia and 14th wealthiest in the world, with a fortune valued at US$35bn (€31bn), according to Forbes.
