By Christopher Bjork
MADRID--Spain's Telefonica SA (TEF) said Friday it has agreed to
begin exclusive talks with Li Ka-shing's Hutchison Whampoa Ltd.
(0013.HK) to sell its U.K. mobile-phone operator O2 for GBP10.25
billion ($15.4 billion), the latest big consolidation move in
Britain's fast-changing wireless market.
Under the proposed deal, which had already been confirmed by
Hutchison, the Hong Kong company would pay up to GBP9.25 billion in
cash plus up to GBP1 billion in deferred upside interest-sharing
payments to Telefonica. The negotiations with O2 parent Telefonica
SA of Spain would occur over a "period of several weeks," both
firms said.
Hutchison owns Three, Britain's fourth-largest wireless carrier.
Combining the two operators would create the largest mobile-phone
company in the country by subscribers.
EE, currently the No. 1 player in the market, is in advanced
talks to be bought by BT Group PLC (BT), a tie-up that would get
the British fixed-line giant back into wireless service and further
shake up the fast-moving European telecommunications sector.
Write to Christopher Bjork at christopher.bjork@dowjones.com
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