Irish

Wednesday 30 July 2014

O2 brand to disappear as Three snaps up rival operator for €850m

Hong Kong-based conglomerate will see market share here increase to 37.5pc

John Mulligan

Published 25/06/2013|04:00

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Robert Finnegan, CEO Three Ireland

Mobile operator O2 has hung up on Ireland after Spanish parent Telefonica agreed to sell its Irish business to smaller rival 3 for up to €850m.

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The much-anticipated deal – which was in the pipeline for months – will catapult Three to being the second biggest mobile firm in Ireland, with a 37.5pc share of the market.

It will quadruple its size, giving it over two million subscribers here, just behind the 2.2 million that Vodafone has. Vodafone is the country's biggest mobile operator.

Owned by Hong Kong-based conglomerate Hutchison Whampoa, Three has agreed to pay an initial €780m for Telefonica Ireland. It will pay up to an additional €70m based on the achievement of certain financial targets.

RUGBY

The sale of O2 here will also see the well-known brand vanish. That will include its removal next year from prominent positions on Ireland rugby shirts and Dublin's Point Depot and replaced with the Three brand.

Speaking to the Irish Independent, Three Ireland chief executive Robert Finnegan said he expected purchase to close within the next six to nine months but hoped it might be sealed sooner. He said he couldn't predict at this stage how the acquisition would impact 1,100 O2 staff and 400 Three staff in Ireland.

Telefonica – weighed down with almost €52bn in debts – is trying to cut the burden to less than €47bn by the end of the year. It slashed the value of its Irish operation by €527m last year as the downturn continued to damage its business here.

O2 Ireland's operating income before depreciation and amortisation slumped 37pc last year to €130m, while its services revenue declined 16.2pc to €567m. Its total revenue, including that from its retail chain, fell 13.1pc to €629m.

The deal to sell the Irish O2 arm will have to be approved by European watchdogs. The European Commission could have concerns that competition in the Irish market will be lessened by the O2 sale and if so Brussels could potentially seek remedies to allow the transaction to proceed.

But Mr Finnegan said he believed Ireland's market had too many operators for a population of just 4.5 million. He said Three would leverage the O2 business to push prices down further for consumers.

O2 currently has 1.56 million subscribers in Ireland, or 28.1pc of the market, while Three has around 475,000, or 9.4pc.

Eircom has a 19.7pc share of the market, mainly through its Meteor network, equating to just over 1.06 million subscribers. Tesco Mobile has a 3.4pc share and Vodafone's share is 39.4pc.

Irish Independent

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