Li Ka-shing’s USD15 billion takeover in the U.K. is a bet that Britons want just one thing from their telecommunications provider: mobile-phone service.
While his competitors in the U.K. are adding television and broadband offerings, the Hong Kong billionaire plans to create Britain’s biggest wireless carrier by combining his Three unit with Telefonica SA’s O2. No TV. No discounted broadband packages. Just mobile.
If the 86-year-old – dubbed “Superman” by Hong Kong media for his investment acumen – gets it right, Hutchison will focus on its more than 30 million customers without the distraction of bidding for expensive TV content or luring broadband subscribers. The risk is that customers will switch to the bundled offers such as those by BT Group Plc, the landline behemoth that on Wednesday introduced consumer wireless service with packages starting at 5 pounds ($7.40) a month.
“In a couple of years, you would expect the majority of people to be looking for quad-play offering, with all services under one operator,” said Stephane Beyazian, an analyst at Raymond James Euro Securities in London. “If this happens, Hutchison will be in a difficult position.”
Some investors whom Hutchison has invited to take a stake in its British venture are hesitant, highlighting the risks in its strategy, according to people familiar with the matter. When announcing the O2 deal on Tuesday, Hutchison said it was still in talks with potential partners.
The deal – creating a company that serves 44 percent of all U.K. mobile-phone subscribers – deepens a push into the European telecommunications industry that Hutchison entered more than a decade ago. While rising demand for faster mobile connections has helped Hutchison sign up users, offerings combining TV, Internet, landline and wireless service have recently gained popularity in Europe as consumers access video, music and social media on multiple devices. Amy Thomson and Jonathan Browning, Bloomberg
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