Hutchison Whampoa, owner of Three U.K., has today acquired O2 Ireland in a deal worth €850 million ($1.1 billion). Telefonica, O2’s parent company, believes the move will “create a new competitive dynamic in the Irish market,” which Three can now claim 37.5% of with 2 million active subscribers.

Three will now be second only to Vodafone in Ireland.

In 2012, Three and O2 Ireland had combined revenues of €803 million ($1.05 billion), while Three’s standalone revenue was just €174 million ($228 million). The acquisition will provide Three “with the scale and financial strength necessary to compete even more aggressively in the market to the benefit of consumers,” the company said in a press release today.

“It leaves Three optimally positioned to become the number one player in the Irish market by providing the best value and service to its customers. In addition the combined business plans to invest strongly in creating a state of the art network including 4G/LTE over the next number of year,” it added.

The Irish Times reports that Spanish firm Telefonica is Europe’s “most indebted telecommunications company,” with a net debt of €51.3 billion ($67.28 billion). That’s more than its market value, and a sale of its O2 Ireland arm has reportedly been a subject of speculation for some time.

Three will pay €780 million ($1.02 billion) in cash once the deal has been approved and completed, with a further €70 million ($91.8 million) due later if certain financial objectives are achieved.

• SourceTelefonica
• ViaThe Irish Times