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Hutchison Whampoa sells third of holding in UK mobile business

Hutchison Whampoa is to sell 33% of its proposed UK mobile phone holding – the combined businesses of Three and O2 UK – to five investors for £3.1 billion. 08 May 2015

The investors are Canada Pension Plan Investment Board, GIC of Singapore, Limpart Holdings, a wholly owned subsidiary of the Abu Dhabi Investment Authority (“ADIA”), CDPQ of Quebec, Canada and BTG Pactual of Brazil, Hutchison Whampoa said in a statement.

The investments are conditional on, and will occur concurrently with, the acquisition of O2 UK from Telefónica by Three, and its combination with Three’s businesses. Hutchison Whampoa plans to use the investments to partly fund the acquisition, it said.

Hutchison Whampoa finalised the deal to buy O2 in March after announcing the move in January. The move will make Hutchison Whampoa the largest mobile operator in the UK, with almost 33 million customers and "significant synergy potential", the company said in a statement at the time.

The merger is still subject to approval by the EU's competition authority. EU competition commissioner Margrethe Vestager recently commented on European telecoms mergers, and said that they must not lead to a rise in prices for consumers.

Director of Hutchison Whampoa Canning Fok said: "It is an honour to have such a strong collection of the world’s largest and most sophisticated investors joining us as partners in building the combined business of Three and O2 UK, which will be the number one mobile operator in the UK with nearly 33 million customers."

"Like us, the willingness of these investors to commit substantial capital to this investment reflects continued confidence in the UK economy and its commitment to maintain and foster a dynamic and world leading telecommunications sector, as well as a vote of confidence in Europe’s plans for a single market in digital communications, leading to increased investment in the telecoms sector," he said.

Canada Pension Plan Investment Board (CPPIB) said in a statement that it plans to invest £1.1bn for a 12% stake in the business.

Mark Jenkins, managing director of the CPPIB said: "This is an exceptional opportunity to acquire a meaningful stake in what will become a leading mobile operator in the UK, giving us immediate scale in an important sector. We expect this investment will generate attractive long-term risk-adjusted returns."

GIC Singapore will also invest £1.1bn, it said in its own statement