Monday 20 November 2017

3 looks on the bright side in O2 buyout as Vodafone widens gap

If anyone was wondering about the gamble that 3 Ireland made by agreeing to acquire rival O2 Ireland for €780m this year, yesterday's telecom industry figures will have made things clearer.

O2, to be sold by a debt-laden Telefonica, is struggling. In the last two years, the company's market share by revenue has fallen sharply from 33.7pc to 26pc.

In the same period, arch-rival Vodafone's revenue share has actually increased, from 43.2pc to 44.8pc. This is the biggest gap between the big two in many years.

It also opens a nine-point gap between Vodafone (44.8pc) and the combined entities of 3 and O2 (36.1pc).

Hutchison Whampoa, which owns 3 Ireland and may see its acquisition price for O2 rise to €850m, will argue that this is not the only way to compare the groups.

It will say other figures from yesterday's Comreg research shows just 1.8pc in difference between the two camps, when measuring subscription numbers that include mobile broadband dongles and machine-to-machine (M2M) subscriptions.

O2, which is profitable in Ireland, has likely fallen foul of the massive debts (more than €50bn) of its Spanish parent company, Telefonica.

However, with the average revenue per user falling sharply again and with the EU seeking to abolish roaming rates, the stakes are starting to look very high for Hutchison Whampoa's Irish consolidation play.

Irish Independent

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