02 News Update: Potential Sale of 02 Ireland
As Telefonica have received the several offers for the Irish sanction of their mobile phone company 02, they are looking into a sale or merger.
The Barcelona based Spanish telecommunications firm have, in recent years, suffered from some debt and although 02 Ireland is not officially on the market for sale the interest from other conglomerates has sparked the possibility of the company bringing €700million in. Having admitted that they will look at selling off some of their assets, this opportunity could be just what Telefonica need to extricate themselves from their debt-ridden state.
Despite several queries over whether such a deal would be permitted within the market, Hong Kong based telecommunications company Hutchison Whampoa who own mobile service competitor Three Mobile have been reported to have shown an interest in the company. Given the unusual nature of this enquiry, Telefonica have been careful to reinforce the fact that they are not committing to any deal immediately – if at all.
02 News Update
The implications of such collaboration may well see the UK and Ireland’s mobile service providers narrow even further. With Orange and T-Mobile already joining forces to create the company – EE (Everything Everywhere) there are now just four major competitors – EE, Vodafone, 02 and Three. Virgin Media are a presence, but less so than these four. If 02 and Three were to combine, the market would narrow still more and leave the punters with very few options; never something the public want. EE have established themselves as the biggest mobile phone service provider in the UK, a position that would be rivalled if a deal such as this were to go through.
The Spanish company’s debts currently sit at more the €51billion and have been reported to want to reduce that by €4billion before the end of the year. However, their plan to achieve this goal is rumoured to be focussed on the sale of assets. These rumours have come about following the sale of another non-core business; their share in Central American for €500million. This sale went through in April 2013 despite its significant release from the pressure that it was under last year thanks to a perk in their cash sales as well as cuts to its dividends.
The other businesses under the Telefonica metaphorical umbrella that could aid the company’s bid for debt reduction includes a Columbian business, a Czech business and a stake in the Latin America market. Along with KPN in Germany, the company remains reluctant to confirm any sales negotiations for the foreseeable future.
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