Sovereign Funds Dial Up £3bn O2 Mobile Stake

A pack of the world's biggest sovereign wealth funds are pursuing a stake in the company that is poised to become the UK's largest mobile phone operator.

Sky News has learnt that state-backed investors from China, Singapore and the Middle East have approached advisers to Hutchison Whampoa, the Hong Kong-based conglomerate, about acquiring shares in a merged O2 and Three.

The combined group, which will be created by Hutchison's purchase of O2 for £10.25bn, is expected to have an enterprise value of approximately £15bn.

It would carry debts of roughly £6bn, and Hutchison has signalled that it will sell about 30% of the new company - worth in the region of £3bn - to institutional investors.

Sources said on Saturday that the Hong Kong-based company had already received a string of enquiries from potential buyers of shares.

The discussions are at an early stage, but are said to include approaches from the Government Investment Corporation of Singapore and a number of giant Canadian pension funds.

The appetite from sovereign investors underline the continuing interest in UK companies following the Qatari takeover of London's Canary Wharf business district and Friday's purchase of a 9.9% stake in British Airways' parent by Qatar Airways .

Hutchison Whampoa won a period of exclusivity to negotiate a takeover of O2 with Telefonica, its Spanish parent, earlier this month, with talks said to be progressing well.

The deal is the second major transaction in the UK mobile sector in quick succession, with BT expected to finalise the terms of its £12.5bn takeover of EE - currently the country's biggest network - in February.

The mergers have sparked concerns about the prospect of higher charges for mobile phone customers, with Three's status in the market as a 'challenger' to its bigger rivals seen by analysts as unsustainable if its owner's takeover of O2 is completed.

This week, Sky plc, the owner of Sky News, struck a deal with Telefonica UK that will allow it to offer mobile voice and data services for the first time.

Like rivals BT, Vodafone and TalkTalk, the move will enable Sky to provide the 'quad-play' of fixed and mobile telecoms, broadband and pay-TV to its customers.

The O2 purchase will be the latest in a series of takeovers led by Li Ka-shing, the Hutchison chairman who has become the UK's biggest foreign direct investor.

In addition to 3, Mr Li's businesses own Superdrug, the container port at Felixstowe and the Eversholt rail company.

Telefonica had been in talks to sell O2 to BT before the British telecoms group decided instead to pursue talks with EE, which is jointly owned by Deutsche Telekom and France Telecom.