Hutchison Whampoa-owned Three Ireland has announced a €780m ($1.02 billion) takeover of O2 Ireland that will make it the second-biggest player in the country’s mobile market and raise cash for debt-ridden Telefonica, O2’s current owner.
Three (Dublin, Ireland) says a further additional deferred payment of €70 million will be payable to Telefonica (Madrid, Spain) if certain agreed financial targets are achieved.
The acquisition of O2 (Dublin, Ireland) will give Three Ireland a total of two million customers and boost its market share to about 37.5%, from a previous figure of less than 10%, putting it just behind Vodafone (Dublin, Ireland) as Ireland’s second-largest mobile operator.
The two companies had combined revenues of €803 million in 2012, compared with just €174 million for Three on a standalone basis.
Besides giving it the strength to compete more aggressively, the takeover should also help Three to embark on a more ambitious rollout of 4G networks over the next few years.
“As an ambitious competitor in the market we have been looking at ways to increase customer numbers and grow market share, and acquisition was the natural next step,” said Robert Finnegan, Three’s chief executive.
The deal is still subject to approval by relevant competition authorities but would mark a significant step for Three, which remains the smallest network operator by far in a number of its European markets.
Nevertheless, it comes amid signs the company is willing to becoming involved in market consolidation as a means of improving its fortunes.
Earlier this year its Austrian subsidiary completed the acquisition of Orange Austria (Vienna, Austria) in a €1.3 billion deal that made it the country’s third-biggest player.
In Italy, meanwhile, Three has been involved in discussions with Telecom Italia (Milan, Italy) about a possible merger of mobile-phone units.
For Telefonica, the sale of O2 Ireland will help to reduce net debt from €52 billion at the end of March.
The Spanish operator hopes to lower the figure to €47 billion by the end of the year, partly through the sale of non-core assets.
In March, it raised $500 million from the sale of subsidiaries in Central America and market analysts think the operator might also look to sell its business in the Czech Republic.