Spain's Telefonica says it has finalised a deal to sell its British mobile business O2 to Li Ka-shing's Hutchison Whampoa for 10.25 billion pounds. As Hayley Platt reports it's the latest in a series of tie-ups in the sector.
Negotiations to buy Britain's O2 have been going on since January. Now a deal looks certain. Spain's Telefonica, owners of O2, have agree to sell to Hong Kong listed Hutchison Whampoa for 10.25 billion pounds. Hutchison shares rose 3 percent on the news. Telefonica's by a similar amount before falling back. JP Morgan's Kerry Craig says these sort of M&A deals are just what the markets like. (SOUNDBITE) (English) JP MORGAN, GLOBAL MARKET STRATEGIST, KERRY CRAIG, SAYING: "Companies have a lot of cash on their bank books at the moment they're trying to get rid of and M&A activity is one of main drivers as well as share buybacks. And as long as the deal is looking favourable and delivering a better company afterwards, I think that's what investors need to look at." It's the latest in a string of deals in the telecoms sector, especially in the UK. Just weeks ago the former state monopoly BT agreed to buy EE in a bid to dominate the British telecoms market. The acquisition of O2 by Asia's richest man and owner of Hutchinson Whampoa, Li Ka-shing, is his boldest bet yet. He founded Orange in 1993 and launched the Three network in 2003 which now operates in six European countries, including Britain. O2 already has around 22 million subscribers, the tie-up will make it the top mobile operator in the UK. For Telefonica, the deal will allow it to focus on its biggest markets Spain, Brazil and Germany. (SOUNDBITE) (English) JP MORGAN, GLOBAL MARKET STRATEGIST, KERRY CRAIG, SAYING: "It's one way of gaining market share very quickly, seeing the growth potential. In more mature industries you tend to more M&A activity come through rather than organic growth and it might just be an easy way to get a foot hold in the market." The deal is still subject to regulatory approval. All being well, it's expected to be completed by the end of June. ///