Hutchison Whampoa looks to complete £10.25 billion acquisition despite failure of Danish telecoms merger last week
Hutchison Whampoa has formally applied to the European Commission (EC) for approval for the proposed £10.25 billion takeover of O2.
The Hong Kong firm submitted its bid on 11 September – the same day operators Telenor and TeliaSonera abandoned plans to merge their respective Danish operations after failing to gain European approval.
The two companies were unable to ease Commissioner Margrethe Vestager’s concerns that reducing the number of Danish operators from four to three would harm competition and could not agree on conditions that would allow the merger to go ahead.
Three O2 application
This development has led to some concerns about the proposed merger in the UK. The combination of O2 and Three in the UK would result in the creation of the country’s largest mobile operator with around 33 million customers, but as with the case in Denmark, the number of networks would be reduced from four to three.
The EC might have concerns that any merger could impact the market and harm consumers. Three, currently the UK’s smallest operator, has a history of disrupting the market with low prices, roaming offers and 4G at no extra cost. Should it become the largest operator, the need for such aggressive tactics would be less obvious.
Hutchison is expected to argue that if the merger does not go ahead, both Three and O2 would be unable to compete with Vodafone and a BT-owned EE. TechWeekEurope has asked Hutchison for comment but had not received a response at the time of publication.
But despite the failure of Telenor and TeliaSonera to secure approval, the EU has given its blessing to a number of other telecoms mergers in recent times, most notably in Ireland where Three and O2 were granted approval to merge on the condition that two Mobile Virtual Network Operators (MVNOs) to launch on the combined network. These are Carphone Warehouse’s ‘iD’ and the planned Virgin Media Ireland service.
Regulator Ofcom says it is currently happy with the quality of service and competition in the mobile market, but says it will take a keen eye on the pending mergers and trend towards convergence taking place in the sector.
“Ofcom doesn’t have direct role [in regulating the transactions] but we work closely with Competition and Market Authority (CMA) and the European Commission (EC),” Brian Potterill, competition policy director at Ofcom told a Westminster eForum in August.