The proposed entity created by the merger of British mobile operators Three and O2 could go public, providing regulators approve the deal.
The proposed entity created by the merger of British mobile operators Three and O2 could go public, providing regulators approve the deal.
Speaking to the Financial Times, Canning Fok, group co-managing director of Three’s parent CK Hutchison, said an IPO would provide a return for investors who have backed the deal.
CK Hutchison, owned by Asia’s richest person Li Ka-shing, forward-sold roughly a third of the combined operator to overseas investors to help fund the acquisition of O2 from Telefónica, raising £3.1bn (US$4.3bn).
Singapore’s GIC and Canada’s Pension Plan Investment Board took the largest stakes, each committing £1.1bn (US$1.7bn). Abu Dhabi Investment Authority, Brazil’s Grupo BTG Pactual and a second Canadian group, Caisse de Dépot et Placement du Québec (CDPQ), are also known to be amongst the investors.
Any flotation would be contingent upon getting the merger past the European Commission – something that looks significantly trickier following the regulator’s stance on TeliaSonera and Telenor’s proposed Danish mobile joint venture. The Nordic telcos abandoned the transaction on 11 September after failing to come up with a remedies package that could persuade the EC to approve the tie-up.
Despite the result of that review, Fok is bullish on the approval of Three and O2.
“I think there is a huge difference between mergers that strengthen the weakest fourth player and a merger that would have marginalised the smallest player,” he told the newspaper. “The specifics of the Denmark case do not represent a typical example for future cases.”
The article hinted that Fok may now pursue a merger in Denmark, and perhaps Sweden too – two other markets in which the Hong Kong group’s operators are the mavericks.
Submitted to the EC on the same day as TeliaSonera and Telenor withdrew their tie-up, the review of Three-O2 is expected to be lengthy. The antitrust authority has until 16 October to finish its Phase I review, which is almost certain to result in an in-depth Phase II investigation – as has been the case with all recent proposed four-to-three deals.
