Telefonica Finalises $15 Billion Sale of UK Unit O2 to Hutchison

"A definitive agreement has been reached after the finalisation of the process of due diligence on O2 UK," the Spanish firm said in a statement, adding the deal was worth equivalent to EUR 14 billion ($15.2 billion.)

Subject to regulatory approval, Hutchison Whampoa will make an initial payment of 9.250 billion pounds and a further 1.0 billion later once O2 reaches an agreed cash flow level, it said.

It hopes to wrap up the deal by June 30, 2016 - a deadline that may be pushed back to September 30, 2016 in certain circumstances.

It is the latest purchase in a spending spree by Hutchison's owner, Hong Kong investment tycoon Li Ka-shing, ranked as Asia's richest man.

Li, 86, who is worth $30.6 billion according to Bloomberg's Billionaires Index, announced a sweeping re-arrangement of his business empire in January.

Hutchison already owns Britain's Three mobile phone network - if he merged O2 with that company, he would reduce to three the number of players in Britain's fast-consolidating wireless telecoms sector.

Some analysts have warned such a move could lead to price hikes owing to less competition.

Hutchison could "drive a lot of synergies" with the takeover, James Britton, a London-based analyst at Nomura Holdings Inc, was quoted as saying by Bloomberg News.

"Whether that really equips them to be fully competitive in a converged UK market remains to be seen."

Li's group said in January that the deal would make it the owner of the largest mobile operator in Britain by market share.

Telecom sector shake-up
It was also the latest in a series of shake-ups in Britain's telecom sector.

British telecoms and TV firm BT had said in November that it was in preliminary talks to buy back O2 - its former domestic mobile phone division - from Telefonica.

Instead BT ended up buying another British mobile phone operator, EE, for GBP12.5 billion.

British telecom giant Vodafone took over Spanish cable firm Ono on July 24 for EUR 7.2 billion.

Telefonica, with operations across Europe and Latin America, is meanwhile looking to turn around its fortunes.

It reported a 35-percent plunge in net profits to EUR 3.0 billion in 2014. Its debt stood at EUR 45 billion at the end of 2014.

It said last month it plans to step up its value-added activities such as fibre optic cable, pay TV and smartphones, and to focus on its main markets in Spain, Germany and Brazil.

The Spanish group wants to pull out of the British market where it has been present since 2005, when it bought O2 for EUR 26 billion.

Telefonica has already sold its operations in the Czech Republic and Ireland.

Hutchison's revamp is also expected to pave the way for Li's retirement and follows speculation of a handover to his son Victor.