Three buys O2 in €850m deal

Mobile communications company Three Ireland has reached agreement to buy rival O2 in an €850m deal that will make it the second largest player in the market.

The deal will initially see Three pay €780m for Spanish telecoms company Telefonica’s Irish operations, with a €70m payment deferred and reliant on O2 meeting certain financial targets.

The purchase is dependent on competition approval and could take between six and nine months to conclude.

Upon completion, Three Ireland will have around 2m customers, combined revenues of over €800m, and a near 40% share of Ireland’s mobile telecommunications market. It will subsume O2s current sponsorship agreements and phase out the O2 brand on a gradual basis.

Three Ireland chief executive Robert Finnegan said the deal will give his company the financial strength to be more competitive.

He said that having grown organically in the eight years since its establishment here, now is the time for the firm to buy.

“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,” he said.

Three Ireland slashed its annual losses by 30% last year, grew revenues by 16%, and upped market share from 7.7% to 9%.

Mr Finnegan said Three will invest “strongly” on the back of the deal, creating a 4G network.

The company’s increased scale will also allow for an extension and strengthening of Three Ireland’s rural network.

Telefonica’s decision to sell out of Ireland, reportedly one of its worst performing territories, is part of an overall plan to slash its €56bn debt, which it hopes to reduce to around €47bn by the end of this year. It will also seek to offload a number of subsidiaries

“This transaction is part of the policy of proactive management of the portfolio of assets in the company and the initiatives to increase Telefonica’s financial flexibility,” the company said.