Telefonica to sell 02 for €780m to 3 Ireland
Telefonica has agreed to sell its Irish unit O2 for €780m to Hutchison Whampoa subsidiary 3 Ireland, Hutchison said in a statement this morning.
The deal, which is subject to regulatory approval, includes an additional deferred payment of €70m after the achievement of agreed financial targets, the statement said.
The sale to 3 Ireland, which is subject to regulatory approval, includes an additional deferred payment of €70m after the achievement of agreed financial targets.
Hit by the economic downturn in Europe, and especially its home market where 27pc of the workforce is unemployed, Telfonica is aiming to cut its debt to less than €47 billion by the end of the year.
It has already disposed of its treasury stock and 40pc of its Central American interests so far this year and Latin America now counts for over half the company's revenues.
If approved the Irish deal will combine Ireland's second largest mobile operator behind Vodafone, with Hutchison's 3, the third largest operator, and take 3 Ireland's market share to 37.5pcwith 2 million active subscribers.
Analysts at Espirito Santo said the O2 Ireland sale was a good move for Telefonica despite the sale price being a 10pc discount to the unit's fair value since the business was small and not central to its strategy.
"This should enable Telefonica to reduce its leverage by approximately 1 percent at the end of 2013," they said in a note.
Barclays and Bank of America Merrill Lynch advised Telefonica on the deal.