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Telefonica enters into negotiations with Hutchison to sell O2 UK for GBP 10.25bn
Announced Date: 1/23/2015 Published Date: 1/27/2015

Telefonica announced that it has entered into an exclusivity agreement with Hutchison Whampoa in relation to Hutchison's potential acquisition of its UK subsidiary, mobile operator O2 UK, for GBP 10.25 billion in cash (approximately Euro 13.5 billion).

Under the terms of the agreement, Hutchison would pay an initial amount of GBP 9.25 billion at closing of the transaction, plus an additional deferred payment of GBP 1.0 billion. Telefonica stated that the exclusivity period will last for a period of several weeks to allow Telefónica and Hutchison Whampoa to negotiate definitive agreements while the necessary due diligence process on O2 UK is completed.

Telefonica O2 UK operates 2G, 3G and 4G mobile networks in the UK and has approximately 24 million customers, including around 2.1 million 4G subscribers. Hutchison also has a presence in the UK mobile market via Three, which serves around 8 million mobile customers, including a claimed 3 million 4G subscribers at the end of 2014.

Telefónica noted that the proposed transaction marks the next step in the company transformation process, which is designed to enable Telefonica to transition into a major digital telco and to accelerate its sustainable long term growth. The company also noted that the transaction, if completed, would serve to further consolidation in the wider European telecoms market.

Over the past year, Telefónica has consolidated its position in Germany via the acquisition of mobile operator E-Plus from KPN, and has submitted an offer to acquire GVT in Brazil from Vivendi.