Liberty Global’s Irish cableco UPC has signed a deal to launch an MVNO next year as it looks set to become an early beneficiary of the O2 Ireland takeover remedies.
The agreement with Three, the Hutchison Whampoa-owned telco that was recently cleared…
Liberty Global’s Irish cableco UPC has signed a deal to launch an MVNO next year as it looks set to become an early beneficiary of the O2 Ireland takeover remedies.
The agreement with Three, the Hutchison Whampoa-owned telco that was recently cleared to buy O2 Ireland for €850m (US$1.16bn), comes as Liberty looks to roll out mobile services across Europe.
Robert Finnegan, Three Ireland’s CEO, said the move underlines how the remedies put in place by the European Commission will achieve their goal of facilitating new market entrants.
“Three’s planned investment to develop a state-of-the-art 4G network will benefit customers of Three and O2 as well as these new entrants,” he said.
The EC approved the O2 Ireland deal on Wednesday on the condition that the merged group continues a network-sharing deal with incumbent telco Eircom, and paves the way for two new Irish MVNOs with an option to upgrade them by selling some of its spectrum.
However, although Irish regulator Comreg welcomed an end to the uncertainty that had hanged over the acquisition since it was announced in June 2013, it warned that the remedies do not go far enough to fully address competition concerns.
“While fully respecting the EC’s position as the decision-making body for assessment of the proposed acquisition, ComReg remains concerned that, given the substance and form of the final commitments, the EC’s competition concerns will not be fully addressed, and that significant negative consequences for Irish consumer welfare may result,” it said.
Rival mobile player Vodafone went a step further and said it was considering options under both EU and Irish law, calling on Comreg to ensure “all operators receive an efficient allocation of spectrum that will sustain dynamic competition” in the country.
The EC requires the merged group to offer up to 30% of its frequencies to market entrants, but Vodafone said a new MVNO would have little incentive to take on the burden of spectrum and a network.
“Vodafone therefore seriously doubts that this network option will ever be taken up,” it said.
“As a result, Hutchison will likely retain all the current spectrum holdings of Hutchison and O2 in Ireland, which is an inefficient and ineffective use of spectrum, will distort competition and will discourage investment in mobile networks in Ireland.”
Ratings agency Fitch said it did not expect new MVNOs in Ireland will have the same disruptive impact that they have had elsewhere in Europe in the past.
“The Competition Commission’s approval follows a similar decision to allow Hutchison to buy Orange’s operations in Austria, and indicates a gradual softening of European opposition to telecom consolidation,” it said.
“This could allow Telefonica’s much larger proposed acquisition of KPN’s German E-Plus arm to proceed. But there are significant differences so that approval is not certain. In particular the German market is much bigger than Ireland’s or Austria’s, which could lead the regulator to decide that the country can support four major operators.”
Analysts at the group also said the O2 Ireland approval could open the door for consolidation in other markets such as Spain and Italy.
