The European Commission has cleared Hutchison Whampoa’s takeover of O2 Ireland in a thumbs up for four-to-three telecoms consolidation.
The approval comes on the condition that Hong Kong-based Hutchison paves the way for two new Irish MVNOs, with an…
The European Commission has cleared Hutchison Whampoa’s takeover of O2 Ireland in a thumbs up for four-to-three telecoms consolidation.
The approval comes on the condition that Hong Kong-based Hutchison paves the way for two new Irish MVNOs, with an option to upgrade one by giving it spectrum, and also requires it to continue a network-sharing deal with incumbent telco Eircom.
More specifically, the merged group must sell up to 30% of its network capacity to the MVNOs, while at a later stage offer them five blocks of spectrum in the 900 MHz, 1800 MHz and 2100 MHz bands.
Irish cableco UPC is thought to be a frontrunner to add mobile to its portfolio of services in the country and is understood to have held talks.
The €850m (US$1.16bn) deal combines Ireland’s fourth and second largest mobile players to gain a market share of 37%, which is still behind Vodafone.
Robert Finnegan, CEO of Hutchison’s Irish unit Three, said: “With the combined strengths of the two businesses, Three will have the scale and financial strength necessary to compete more aggressively against the number one in the market.
“Our ability to invest coupled with the combined subscriber base of both businesses will create new competitive dynamics in the Irish telecoms market.”
The sale of O2 Ireland will help its previous owner Telefonica, Spain’s telecoms incumbent, reduce a debt mountain that stood at €42.7bn (US$58.2bn) at the end of March.
But it also has significant implications for similar consolidation deals across Europe, with the EC currently reviewing another, much larger, four-to-three deal between Telefonica Deutschland and E-Plus.
Ovum analyst James Robinson said: “The EC’s decision regarding the takeover in Ireland could be a signal that it is ready to accept some in-market consolidation, despite usually favouring the disruptive nature of smaller players such as Free Mobile in France.”
After clearing the deal, Joaquin Almunia, EC’s Vice President in charge of competition policy, said the move will help consumers benefit from improved services at attractive prices as mobile data consumption soars.
“To achieve this, it is essential that healthy competition is preserved in mobile telecoms markets,” he said.
“The commitments offered by Hutchison 3G ensure that Irish consumers will continue to enjoy these benefits.”
Hutchison was being advised by JP Morgan, while Telefonica hired BofA Merrill Lynch and Barclays, TelecomFinance understands.
