Hutchison Whampoa, parent company of UK telecom operator Three UK, has announced that it has entered into exclusive negotiations with Telefónica, expected to last over a period of several weeks, for the potential acquisition of Telefónica UK subsidiary, O2 UK for an indicative price in cash of £9.25 billion. If the consolidation between Hutchison and O2 goes through, the new entity will becomes UK's biggest mobile operator.
End of last year, the market was rife with talks about the possible acquisition of O2 UK by BT, before BT announced that they are pursuing a similar deal with EE UK. Although no further discussions were announced, the recent statement by Hutchison points to the fact that the merger frenzy that was expected to intensify in 2015, especially in Europe, is still continuing.
Mark Windle, Head of Marketing of OpenCloud, a company that delivers open, standards-based network service layer transformation solutions to the telecommunications industry, commented on the merger, saying that:
Mergers such as this, and BT’s acquisition of EE, show how traditional telecoms operators are seeking out opportunities to horizontally integrate access networks. In the broader sense it is mobile, fixed-line, Wi-Fi all coming together to offer complete and cost-effective connectivity packages. We’ve seen BT, EE and Sky all announce plans for quad-play offerings, delivering mobile, broadband and television to their customers. Hutchison Whampoa’s purchase of O2 continues the trend of partnerships, mergers and acquisitions.
Such integration of access networks provides a key opportunity to accelerate the decoupling of their service and access divisions. In doing this, operators will be able to deliver any communication service over cellular, IP or Wi-Fi, based on a customers’ preference. The separation will allow them to focus on service innovation, similar to competing OTT service providers.
The move by mobile operators to start offering quad-play services is spurred primarily by mobile operators' strategy to reposition themselves as digital service providers. The IP-tization of network and digitalization of content have given operators a competitive edge in providing digital services and digital content, leveraging their direct reach to subscribers and also the brand presence and engagement they are able to garner across their subscriber base.
Jennifer Kyriakakis, Founder and VP of Marketing at MATRIXX Software, a provider of real-time charging, policy and analytics, sees the transitioning to Digital Service Providers as MNOs' response to changing market conditions, including technological developments. In her statement, Jennifer said that, “this is an interesting time for the industry and we will see more and more CSPs make the leap from being network-centric organisations to becoming customer-centric businesses in the DSP mould. This is an ideological shift, a new phase of evolution that is being driven by innovations in IT, bolstered by new operational models such as cloud and virtualisation that are enabling operators to reduce costs, become more agile and adapt to changing market conditions.”
