Take your partner by the hand

Hutchison Whampoa hopes to buy O2 UK for $15 billion

The pairing-off of major U.K. telecommunications players continues: On Friday, Three’s Hong Kong owner, Hutchison Whampoa, said it was now in exclusive takeover discussions with Telefónica’s O2.

The merry dance began last November, when fixed-line player BT (the company that once spun out what became O2) said it wanted to get back into the mobile game, and was considering buying either EE (joint-owned by Germany’s Deutsche Telekom and France’s Orange) or O2. Hutch waded in days later, indicating that it was also mulling a purchase of EE or O2.

In December, BT formally announced that it was in exclusive talks to pick up EE for just under $20 billion. So it’s no surprise to see Hutch now doing the same with Three – a move that would reduce the number of network-owning British carriers from four to three.

As things stand, Spain’s Telefónica would get £9.25 billion ($13.86 billion) in cash for O2, which it would no doubt use to pursue further consolidation opportunities in other markets – last year it bought KPN’s German E-Plus subsidiary, for example.

It could also look forward to “deferred upside interest sharing payments of up to a further £1 billion in the aggregate payable after the cumulative cash flow of the combined businesses of Hutchison 3G UK Limited and O2 UK has reached an agreed threshold,” according to the statement.

All this depends on due diligence, agreement on terms and regulatory approval. At the EU level, digital economy commissioner Günther Oettinger says he’s keen to see more consolidation in European telecoms, so as to create bigger regional rivals to U.S. carriers. Though this, of course, would be a larger Hong Kong-owned player.

Telefónica already got rid of its U.K. fixed-line business in 2013, selling it to BSkyB for $300 million.