Three and O2 to Merge 4G Networks

At the end of January Hutchison Whampoa Ltd, the owner of Three, entered into exclusive talks with Telefonica, the owner of O2 about a potential acquisition of the O2 UK business. With the acquisition of EE by BT it seems that consolidation of the telecoms market is well underway.

Three and O2 4G networks

As usual Three seems remarkable relaxed about the potential changes ahead. A statement on the Three website reads:

“Any acquisition is likely to be a lengthy process. It’s business as usual at Three. We remain focussed on making mobile better for consumers in the UK.”

The official line from Hutchison Whampoa is slightly more enlightening however:

“Hutchison Whampoa Limited (HWL), parent company of UK telecom operator Three UK, announced that it has entered into exclusive negotiations with Telefónica, S.A. over a period of several weeks for the potential acquisition of Telefónica, S.A.’s UK subsidiary, O2 UK, for an indicative price in cash of £9.25 billion which would be paid at closing, and deferred upside interest sharing payments of up to a further £1 billion in the aggregate payable after the cumulative cash flow of the combined businesses of Hutchison 3G UK Limited and O2 UK has reached an agreed threshold.  The timing and amounts of these payments will depend on the actual cash flows of the combined businesses.”

A statement on the O2 website about the potential acquisition of the mobile network by Hutchison Whampoa reads:

“Subject to agreement as a result of these negotiations and any necessary approvals including merger clearance, this will strengthen our future as a leading, and highly trusted UK communications provider at a time when the demand for mobile connectivity has never been greater. Three is known for campaigning on behalf of its customers, much like O2.  We are confident that an agreement will mutually benefit the customers of both companies, as well as drive better value, quality and investment in one of the most digitally competitive countries in the world.”

So while the discussions and negotiations continue let’s take a look at the current status of the two 4G networks:

Status of the Three 4G network

In December, just ten months after the commercial launch of the Three 4G network, it was announced that 3.1 million Three customers were already using 4G. This is more than one third of Three’s eight million customers. 4G on Three now covers 48% of the UK population and is on target to reach 98% of the population this year. Three customers can enjoy 4G as soon as it is rolled out in their region at no extra cost and customer satisfaction with network experience is at its highest ever. Three is currently deploying equipment to support low frequency 800MHz spectrum to significantly enhance both indoor and rural coverage in 2015.

Status of the O2 4G network

O2 launched its 4G mobile network in 2013 in London, Leeds and Bradford. 4G from O2 is now available in over 232 UK towns and cities and covers 45% of the UK population. Like Three, O2 is on target to reach 98% of the population this year. 4G from O2 uses the 800 MHz (0.8 GHz) network frequency.