Three to buy O2: here’s what Three is telling its employees

Three to buy O2: here’s what Three is telling its employeesAs you’ve no doubt heard, this being not just mobile news but news news, O2 and Three are moving forward with the latter’s acquisition of the former, entering exclusive negotiations with a headline price of circa £10 billion.

It’s a pretty big deal, potentially bringing us from Big Four to Big Three in the UK, though it’s by no means finalised. In the meantime, let’s take a cheeky peek at Dave Dyson’s internal communication to Three employees.

Before we drop Dave’s message in, regulatory approval is the big issue here, though it’s pointed out that Three buying O2 in Ireland brought them to three networks.

Part of any regulatory agreement could see the combined network (which would be the biggest in the UK with 41% of the market) forced to welcome new MVNOs. Sky, for example, was thought to be interested in O2, but that ain’t gonna happen now.

I could ramble on some more, but I’ll hand you over to Three CEO Dave Dyson, who sent this internal communication yesterday:

Good morning everyone.

For those of you who are early birds, you may have already seen the Press Release that was released this morning by our owner / shareholder, Hutchison Whampoa. If not, it is attached for your easy reference. A summary of the key points is as follows:

• Hutchison has agreed with Telefonica (who owns O2 in the UK) to enter into exclusive discussions about the potential purchase of the O2 business in the UK

• A headline price of about £10 billion has been agreed but the full agreement is not yet complete

• In order for the agreement to be finalised, there are 2 key things that need to happen first: 1. Hutchison will work with Telefonica to do an in depth review of the O2 business to make sure it has clear visibility of the O2 assets and the profitability of the business 2. Detailed terms and conditions relating to the purchase, beyond just the price paid, need to be negotiated and agreed

• Both these activities will be done in parallel and the indication is that this will take a “period of weeks”

• Assuming the current discussions can be turned into a binding agreement, the main next step would be to obtain regulatory approval for the acquisition – this will be given by the European Commission and will likely take around 12 months to get approval i.e. not likely to be earlier than Q2 2016

What does it mean for Three and you?

• First of all, it’s a strong show of confidence by our shareholder in the UK mobile market. That confidence I am sure is underpinned by our own performance in the market and significant success we have achieved over the past few years

• Second, it is worthwhile highlighting that there will be no immediate impact on what we need to do in 2015 and therefore what you are currently working on in your 2015 objective setting should be unchanged

• If the purchase did conclude in 2016, Three would have the opportunity to leverage the combined assets of both businesses – spectrum, network, customer base – and of course that is a very exciting prospect at a time when mobile data is really starting to take off in the mass market

• But I am not getting ahead of myself, we need to maintain the great momentum we have in our business so that whatever happens with O2, we exit 2015 in the best possible position

• In the meantime, if you are asked questions by our customers or partners, the best response would be a simple statement of the facts that we have right now – The owner of Three has entered into exclusive talks with owner of O2 about a potential acquisition but any agreement will be a lengthy process and it will be at least Q2-2016 before any integration would begin. Until then it’s business as usual. I hope this helps to give some context. If you have any questions please ask your line manager in the first instance but to set expectations, it’s too early in the process to be able to go into much more detail than what is in the Press Release.


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shuwaz  Feb. 2, 2015 at 22:40

I guess this isn't a good time for me to apply for that IT job at O2?


Harryisme  Feb. 2, 2015 at 23:04

So Huchinson started as the owners of Orange, which they sold to french telecommunication company, then started another Mobile network called Three which never quite reached the levels Orange did, and now they are in talks to but O2.

Not sure how I feel about this, I'm not a big fan of three and I've been with O2 for years now, I've tried other networks but ultimately alwas go back. Hopefully we get Three's pricing and O2 service, and not O2 prices and Three service.


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