Li Ka-shing completes the largest overseas acquisition, which is to buy the rhythm of the whole UK?

The Wall Street Journal reported that Li Ka-shing's Hutchison Whampoa Limited (Hutchison Whampoa Ltd., 0013.HK, Short: Hutchison Whampoa Limited) was close to finalizing a takeover of O2, the UK mobile operator, on a scale of $15 billion trillion. The deal will be the biggest overseas acquisition by Li Ka-shing.

Hutchison Whampoa will announce the deal as soon as this week, a person familiar with the matter said in Monday. Hutchison Whampoa said in January that it was in exclusive talks on acquiring the O2 of the Spanish Telefonica SA, Hutchison Whampoa is expected to pay 9.25 billion pounds (about $13.84 billion) in cash, and Hutchison could pay up to 1 billion pounds if O2 and Hutchison's UK operator, three, reach cash-flow targets.

The acquisition of O2 at $15 billion is the biggest global takeover by Li Ka-shing, surpassing his 2010 takeover of EDF Energy's UK power grid business by $9 billion.

Telecom operators pursue oligarch economy

Three and O2 after the merger of more than 31 million users, accounting for about 41% of the market share, will become the largest telecommunications operators in the UK. The second and third were EE and Vodafone, each holding 32% and 24% per cent of the market.

It is understood that the second EE is also the product of the merger of two large telecom operators, EE was founded in 2010 by the T company's parent company Deutsche Telekom and Orange Company, the parent company of France Telecom's British assets. In December 2014, British mobile operator EE said in a statement that BT was seeking to buy EE at a price of 12.5 billion pounds, and that the two sides had already started an exclusive business. The statement said that the cost of the BT payment, part of the cash, part of the shares. Deutsche Telekom and Orange will share the cost, but the former will charge higher shares, so if the deal is reached, its BT stake in the 12%,orange only hold 4%. EE will be held jointly by Deutsche Telekom and French Orange.

Li Ka-shing acquisition of O2 will change the UK mobile communications market. Previously, Hutchison Whampoa's three to market with Low-cost strategy to provide customers with a fairly affordable data and voice packages. Telefónica and Hutchison Whampoa are hoping to hitch a ride with the O2 deal to the antitrust censors to reinforce the merger, as BT bought telecoms giant EE at a price of 12.5 billion pounds, according to people familiar with the matter.

"The telecom operators pursue the scale effect and the natural monopoly determines that the telecommunication industry is suitable for oligopoly competition." The insider who declined to be named told the author. In recent years, large mergers and acquisitions by telecom operators have been confirming this point.

From the Global Telecommunication Industry development environment, "the traditional voice business is depressed, OTT impact increasingly intensified", pushing the merger tide intensified, the purpose of telecom mergers and acquisitions is to create more powerful companies. and the rapid development of global LTE is one of the main reasons to promote the merger tide. In this case, through mergers and acquisitions to reduce the cost of LTE network deployment, while the smallest "time difference" to enter the market is the most effective way.

In the US market, July 10, 2014, Sprintnextel, the third largest mobile operator in the United States, was bought by SoftBank. Although then appeared soft silver will buy T rumors, but eventually soft silver chose to give up. Verizon and At&t, the two other giants of the US mobile communications market, are not idle. Verizon bought the Intel Internet TV business after buying CDN service EdgeCast for more than $350 million trillion, at&t just completed a takeover of Leap Wireless and then launched a takeover of satellite TV operator DirecTV.

Europe's telecoms industry, though relatively slow, has not diminished the heat of mergers. The European market was already a "paradise" for mergers and acquisitions earlier in 2014. The Italian telecoms company and Telefónica have also issued an offer to GVT, a broadband subsidiary of Vivendi Brazil, and Vodafone bought Kabel Deutschland, the Spanish cable operator Ono and Germany's largest cable operator; Numericable, the French cable operator, wants to buy SFR, its telecoms operator. Deutsche Telekom and Orange confirmed in November that two are negotiating with BT for the sale of its joint venture subsidiary, EE shares. Vodafone also completed a merger of Greece's fixed network and broadband operator Hellas in November, further strengthening its ftns capabilities.

Natural monopoly is the inherent characteristic of the telecom industry, and the American history has taken a series of measures to break the monopoly of telecom operators, which results in the bleak picture of American telecom industry in early 21st century.

In 1996, Clinton signed the Telecommunications Act, opening up competition in all sectors of telecommunications, with free competition in all areas such as local telephone, long-distance, mobile, radio and television and the Internet. The access mechanism has been fully liberalized, leaving thousands of new telecom operators with venture capital and bank loans. In the U.S. market, there are more than 4,000 telecom operators. The irrational price war triggered by "Gruel" has pushed telecom prices to the bottom.

Some economists point out that a country can only have four or five telecom operators survive, excessive competition is pushing telecoms operators into trouble. In early 21st century, Verizon, SBC Communications and Southern Bell were saddled with 60 billion, 30 billion, and 20 billion of billions of dollars in debt. This testifies to the failure of the United States to promote free competition in the reform of the telecoms industry.

In a free competition environment, it is difficult for telecom operators to guarantee stable and free communication to users. Compared to the general enterprises, telecom operators assume greater social responsibility, it must be able to provide customers with stable, free telecommunications services. Therefore, telecom operators must have a more complete network resources, improve the operational capacity. The telecom operators must ensure the unification of the network, and only then the telecom operators can provide the perfect telecommunication service for the users.

Under the mechanism of free competition, the increasing of the market subject and the interconnection between enterprises will become more and more prominent. In the United States, Brazil and other countries, in order to promote the full competition in the market, the government has divided the national market into a large number of telecommunications areas, and operated by different telecom operators thus leading to the entire telecommunications industry operating cost improvement, and led to the problem of interconnection interoperability. In 1998, the Brazilian Government, in order to promote the reform of the telecommunications industry, the main carrier of the implementation of the spin-off, because of the hostile competition between the companies, there has been a nationwide interruption of communications, and even the local phone is not a breakdown of the situation.

In addition, free competition cannot solve the contradiction between the competition expansion of telecom operators and the natural monopoly of telecommunication industry. Telecommunications is a special industry, which determines that it does not adapt to free competition as other industries do. The telecommunication industry is the basic industry of the whole nation sharing, it has obvious natural monopoly. In a specific area, a complete telecommunications network can meet the homogeneous needs of all users. This natural monopoly completely excludes the need for free competition. Other telecom operators, if they also lay the same network, can only be a meaningless duplication of construction, resulting in a great waste of social resources.

But at the same time, the operation of the telecom industry and the size of the main business has a great relationship, its scale benefit is obvious, and the profit potential of the telecom is gradually released with the enlargement of the user scale and the increase of the business volume, therefore, the competition of telecommunication is the competition of network resources. This leads to the free competition mechanism of telecom operators, in order to be able to gain advantage in the competition, we must do everything possible to expand the scale of the basic network, to occupy a limited user groups. Therefore, the contradiction between the inherent competitive expansion of telecom enterprises and the natural monopoly of telecommunication industry has doomed the failure of the free competition mechanism of telecommunication industry.

Canadian pension fund to invest in new O2 of Li Ka-shing

The new O2 has attracted billions of of pounds of investment since its inception. According to the Star Island Daily reported March 2, and Huang's telecommunications company 3 and O2 UK merged new group, has been included in the Canadian Retirement Investment Authority and Ontario teacher pension negotiations, involving a number of 1 billion pounds. The source pointed out that at least 3, 4 buyers were selected, involving a share value of about 2.8 billion pounds.

Foreign pointed out that and Wong intends to sell the merged telecommunications group shares involved in 2.8 billion pounds, that is, at least about HK $34 billion, and has been interested investors to negotiate a total amount of up to 5 billion pounds, that is, 60 billion Hong Kong dollars, super purchase about 0.78 times times. However, negotiations are still at an early stage, and there will be no real progress until the EU approves the O2 deal.

China's sovereign funds are also interested, but may not eventually invest, foreign said. CIC, Singapore's Temasek and GIC, the Qatar Investment Authority and several Canadian retirement funds have long planned to stake up to 30% of the merged new Telecommunications group.

And Huang announced at the end of January, its 3 UK to the Spanish telecommunications Telefonica, the exclusive purchase of British subsidiary O2. The intent price is 9.25 billion pounds in cash and is subject to an additional payment of a deferred profit share of up to 1 billion pounds after the merger of UK and O2 UK has reached the financial target of 3.

And Huang Finance director Sixt earlier revealed that the plan for the acquisition of O2 to seek 6 billion sterling bank loans, is expected to O2 with its 3 UK operations after the merger, will likely reduce less than 30% equity to introduce private equity. It is reported that the above-mentioned sovereign funds have expressed their intention to share shares with Huang and are still at the preliminary stage of discussions.

And Huang last Thursday when the results revealed that the total number of active customers in Europe increased by 13% in the year, a total of more than 25 million customers. The European Group of 3 recorded a total income of 65.6 billion yuan, an increase of 6%. EBITDA and EBIT also increased by 23% and 42% respectively to $15.6 billion and $6.9 billion to reflect the improved net customer service margin, the rigorous operating cost framework, and the cost synergies that continued to be achieved after the merger between Austria and Ireland. With the exception of Italy, all of Europe's 3 clusters have increased their profitability during the year.

Li Ka-shing invests 40 billion pounds as Britain's largest single overseas investor

In recent years, Li Ka-shing has frequently invested in Europe, and its main investment areas are mainly in the infrastructure, telecommunications and retailing industries, in which Britain is a "major battlefield". Even the British media wrote: Li Ka-shing to buy "whole Britain". Li Ka-shing is shifting the battlefield, "copy bottom" Europe, Australia.

2010, 2011, Li Ka-shing has 9.03 billion U.S. dollars and 3.87 billion U.S. dollars to acquire the British power grid and water business, July 2012, and cost 3.032 billion U.S. dollars to acquire British pipeline gas business. The company currently controls nearly 30% of the UK's gas market, one-fourth of the electricity distribution market and about 5% of the water supply market.

In February 2013, Li Ka-shing and his father, Hutchison Whampoa and PCCW, respectively, bid for the UK's 4G spectrum, which ended up with 225 million pounds. Compared with the peak of the 2000 branch network, and the Yellow-headed consortium for nearly 4.4 billion pounds (HK $53.8 billion), the British 3G licence was equivalent to 5.1% of the current year's costs.

April 2014, the original Hutchison Whampoa investment by the London market agreed to invest 1.512 billion of dollars in the London business District Canary Wharf (Canary Wharf) rebuilt convoys Wharf, to carry out the commercial and residential projects. The company also became Britain's largest single overseas investor.

January 20, 2015, the British Private holding fund 3i Infrastructure Company issued a notice that the sale of its railway leasing company Eversholt Rail Group to Lee Ka-shing, which Yangtze River Industrial (Group) Co., Ltd. and the Yangtze River Infrastructure Group Co., Ltd. each accounted for 50% of the equity, the deal will be completed in March.

According to statistics, as of 2014, long Real Group has become Britain's largest single overseas investors, the total historical investment of more than 30 billion pounds, plus the acquisition of the British O2 spent 10 billion pounds, its investment in the UK will be more than 40 billion pounds.

Morning whistle analyst Wang Cheng Shangyi author