Li Ka-shing purchases British cellphone operator O2 and caps a reversal of fortune for his European telecommunications business which has spent almost a decade on a financial standstill. Hutchison Whampoa Ltd. Is a conglomerate run by Mr. Li. He intends to pay £9.25 billion ($13.74 billion) in cash to buy O2 from Telefónica SA of Spain as well as £1 billion later if the combination of O2 with Three. Three is Hutchison’s existing British carrier. This will transpire if O2 meets cash-flow targets. This information is according to a Telefónica regulatory filing held on Tuesday.
This acquisition will complete Mr. Li’s telecom and infrastructure company and will be known as one of Europe’s top wireless providers. This will more than triple Three’s U.K. subscribers to 34 million and creates the country’s biggest provider of mobile services.
Mr. Li, who is chairman of Hutchison and Cheung Kong (Holdings) Ltd., is finally enjoying his success. Hutchison is the first company to develop high-speed third-generation, or 3G, networks in the United Kingdom when it started operations in 2003.
“They are certainly a disrupter operator, and a maverick,” said Kester Mann, a principal telecommunications analyst at CCS Insight. Three has been able to entice customers using consumer – friendly offers such as unlimited data plans, free calls using Internet phone operator Skype and free roaming for voice calls.
On the other hand, Telefónica said the sale is likely to be completed no later than June 30, 2016, subject to regulatory approvals. The company sold its Irish telecom operations to Hutchison in 2013.The O2 deal is the latest in Mr. Li’s buying spree of water and waste-management utilities, in Europe since the financial crisis. He is taking the most of the situation by buying relatively cheaper companies as well as assets that have a steady cash flow. All these efforts reduce exposure to Hong Kong and China.
It is evident that Mr. Li is very much interested in European companies. Earlier this year, Mr. Li announced a string of deals in Europe which included takeover bids for a British train-car maker and a Dutch drugstore chain. One of Mr. Li’s key lieutenants, Hutchison Managing Director Canning Fok, is the brains of the telecom businesses. Mr. Fok is an accountant and accomplished pianist; he favors a streamlined management structure with little bureaucracy. Top executives of European units do not have any issues reaching Mr. Fok directly by phone and quickly win approval for a strategy change. This is done even within 24 hours.
It has been known that it took more than two months for Telefónica to reach an agreement on the O2 deal but on the other hand Mr. Fok needed less than 36 hours to negotiate Hutchison’s purchase of the Spanish company’s operations in Ireland in 2013. Mr. Fok said last month it was considering a potential merger in Italy.
By AL Mijares
About Hutchison Whampoa Ltd
Hutchison Whampoa Limited is an investment holding company with headquarters in Hong Kong. It is a Fortune Global 500 company and one of the largest companies listed on the Hong Kong Stock Exchange. HWL is an international corporation with a diverse array of holdings which includes the world’s biggest port and telecommunication operations in 14 countries and run under the 3 brand. Its business also includes retail, property development and infrastructure. It is 49.97% owned by the Cheung Kong Group. Hutchinson Whampoa Limited stock market evolution: http://www.bloomberg.com/quote/13:hk
About Li Ka-shing
Sir Ka-shing Li is a Hong Kong business magnate, investor, and philanthropist. As of April 16, 2014 he is the richest person in Asia, with a net worth of $31.9 billion. He is the Chairman of the Board of Hutchison Whampoa Limited and Cheung Kong Holdings as of 2008. He is the world’s largest operator of container terminals and the world’s largest health and beauty retailer.
Telefónica, S.A. is a Spanish broadband and telecommunications provider with operations in Europe, Asia, North America and South America. It is one of the largest mobile network providers in the world. It has headquarters in the Distrito Telefónica in Madrid. Telefonica stock market evolution: http://www.reuters.com/finance/stocks/overview?symbol=TEF.MC
Telefónica UK Limited is a telecommunications and Internet services provider in the United Kingdom owned by Telefónica. It is the second-largest mobile telecommunications provider in the United Kingdom and is headquartered in Slough. O2 plc was purchased by the Spanish telecommunications company Telefónica in 2005 for £18 billion. On March 24 2015 Three UK purchased O2 UK subject to regulatory approval. Three UK is now the UKs largest network overtaking its competitors. O2 stock market evolution: http://www.marketwatch.com/investing/stock/otow