Officials of Telefonica confirmed their agreement on Tuesday to sell O2, the Spanish carrier’s British wireless unit, to Hutchison Whampoa of Hong Kong in a cash deal valued at £10.25 billion (US$15.3 billion).

Following in the wake of BT’s recent $19.1 billion pact to acquire Everything Everywhere (EE), the largest provider of mobile network services in the United Kingdom (UK), Tuesday’s agreement represents the second major transaction to impact the British wireless sector in a month. Hutchison already owns Three, a key competitor against EE, O2 and Vodafone in the UK market. In addition to leapfrogging EE as the largest wireless carrier in the UK with 33 million subscribers, the combination of O2 and Three would reduce the number of British national wireless carriers from four to three. Although competition authorities in the UK have previously stated their preference for four national wireless operators, executives at O2 voiced confidence that the deal will be approved within a year.

Under the terms of the agreement, Telefonica will receive an initial cash payment of $13.83 billion for O2. At a later date, Hutchison will remit an additional payment of up to $1.49 billion that will be determined by the performance of the merged entity and its ability to meet prescribed cash flow targets. As Hutchison managing director Canning Fok boasted that the merger “will create a business with unmatched scale and strength,” Dave Dyson, the CEO of Three UK, projected that: “Three's leadership in mobile data together with O2’s strength on network coverage . . . will bring very real benefits to businesses and consumers throughout the UK.”