Mobile phone company O2 Ireland has been bought by Three in a deal worth up to €850 million.

Three are paying €780 million up-front, and will pay a further €70 million depending on the financial performance of O2. O2 is owned by the Spanish telecoms company Telefonica and it has been selling assets to pay down its debts.

The combined companies will have nearly 2 million customers and a 37.5% share of the mobile market, if the takeover is approved by competition watchdogs.

The two companies had combined revenues of €803 million in 2012, which compares to Three revenue of €174 million on a stand-alone basis.

Three says the deal will enable it to invest strongly in creating a state of the art network including 4G/LTE over the next number of years.

Three Ireland is 100% owned by multinational conglomerate Hutchison Whampoa Ltd (HWL).

CEO of Three Ireland is Robert Finnegan. He told Breakfast here on Newstalk this merger is good news for customers.