Tuesday 16 October 2018

3 Ireland network fails on day of €780m O2 deal

John Mulligan

John Mulligan

Mobile operator 3 suffered an embarrassing network failure this morning – just as it confirmed a deal to pay up to €850m to buy Telefonica’s O2 arm in Ireland.

The 3 network went down shortly after 9am, just two hours after it announced a long-expected deal to buy the O2 operation here.

Its users have been unable to make calls or send text messages.

Owned by Hong Kong conglomerate Hutchison Whampoa, 3 confirmed the outage but said it had been caused by a third party services provider, Virgin Media. It said it was the first network outage it suffered in Ireland since it entered the market in 2005.

“The outage follows a transmission link failure by a third part provider, Virgin Media,” it said. “We have the best team working to address this and service is expected to resume shortly.

“We apologise to our customers for the inconvenience,” it told customers on its website.

3 is planning to become the country’s largest mobile operator once it acquires the O2 operation. It will have 2m active subscribers compared to the 2.2m Vodafone has.

Telefonica agreed to sell its Irish unit O2, 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 €47bn 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.



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