European telcos ring in the changes as Hutchison Whampoa agrees to snap up UK mobile unit O2 for £10 billion and Portugal Telecom shareholders say yes to a 7.5 billion euro asset sale to Altice. Hayley Platt reports.
A shake-up in the telecoms industry. First, Asia's richest man has been shopping in Europe. Li Ka-Shing's Hong Kong based Hutchinson Whampoa has agreed to buy Telefonica's British mobile unit O2. The deal, worth more than 10 billion pounds, is Li's largest overseas acquisition yet. If successful, it will create the UK's biggest mobile group. But it has to satisfy the regulators first. And that, says IHS telco expert, Daniel Gleeson, could come with conditions. SOUNDBITE: Daniel Gleeson, IHS, Telecoms Analyst, saying (English): "You've seen across Europe deals like this that have gone from 4 operators to 3 operators, regulators have stepped in and put down strict rules to say 'OK we'll let this deal go through but you must allow virtual operators, those who don't operate their own network, to come in and to resell your airtime'. That's what happened in Ireland and Austria and it's almost certainty what's going to happen here." The past several years have seen a buying frenzy in the telecoms sector. Including... BT's acquisition of EE last year for an estimated 19.6 billion dollars Telefonica purchased smaller rival KPN's E-Plus for 11.7 billion dollars And in 2012 regulators approved a $15.8 billion for Liberty Global to buy Virgin Media This year is shaping up to be just as busy. On Thursday, Portugal Telecom announced its shareholders had approved a sale of Portuguese assets belonging to its merger partner, Oi. France's Altice is the buyer for 7.4 billion euros. The sale marks the effective unwinding of the union between PT and the Brazilian company. Oi acquired debt through the merger it now wants to pay down. SOUNDBITE: Daniel Gleeson, IHS, Telecoms Analyst, saying (English): "It has very very large amounts of debt relative to its size and much like Telefonica its growth business and the only business that's really vibrant is in Latin America. That's why pushing off its Portuguese assets and letting itself focus on Latin America is probably going to be the best thing in the long run for the company." With most Europeans owning at least one mobile phone each, networks are reaching saturation point. That together with tougher regulations pushing down the price of text messaging and roaming charges, operator revenues are being squeezed. The relatively untapped emerging markets are next in focus, where there's still plenty of growth to be had.