Telefonica has agreed to sell its operating business in Ireland to 3 Ireland, owned by Hutchison Whampoa, for EUR 850 million. The consideration includes EUR 780 million in cash payable on completion and a further additional deferred payment of EUR 70 million dependent upon achievement of agreed financial objectives.
The takeover of its bigger rival takes 3 to the number two position on the Irish market, with an estimated market share of 37.5 percent, with over 2 million active customers. The combined operators had pro forma revenues of EUR 803 million in 2012, compared to just EUR 174 million for 3 alone. 3 said the deal will give it the financial strength and scale to challenge Vodafone for the number one position on the market, as well as invest in rolling out a LTE network.
The transaction is subject, among other conditions, to obtaining the relevant competition approvals. The deal would consolidate the Irish market to three mobile networks, from four previously. O2 said it will continue to serve its 1.6 million customers as normal, until the deal is completed.
This transaction is part of Telefonica’s ongoing policy of proactive management of its asset portfolio with the aim of increasing the company’s financial flexibility, the Spanish company said. Without considering the additional deferred payment, Telefonica expects this agreement to reduce its net debt position by approximately EUR 780 million. Telefonica's stated goal is to reach a net debt level below EUR 47 billion by end-2013.
