Three Ireland prepared to sell spectrum as part of O2 acquisition

Wednesday 26 February 2014 15.37
Combining O2 Ireland with Three Ireland would create the second biggest mobile operator in the country
Combining O2 Ireland with Three Ireland would create the second biggest mobile operator in the country

Three Ireland is prepared to sell radio spectrum and continue a network sharing deal with a rival in order to win EU approval of its $1 billion bid for O2 Ireland, a source familiar with the matter has said.

Hong Kong-based conglomerate Hutchison Whampoa, which owns mobile operator Three, wants to strengthen its position in Europe where it operates in six national markets.

The lengths to which it is going to secure acceptance of the Irish deal is a telling sign of how tough the European Commission will be on telecoms mergers.

That rigor on the part of the EU's competition regulators could also have implications for a bigger deal in Germany, where Telefonica Deutschland wants to buy KPN's E-Plus for €8.6 billion.

Adding O2 will make Hutchison Whampoa Ireland's second biggest mobile operator behind Vodafone, but it has raised fears that a reduction in the number of operators could lead to higher consumer prices.

"Hutchison will offer to sell spectrum to MVNOs and guarantee to keep in place a network sharing agreement with Eircom," the source told Reuters, adding that Hutchison would submit its offer within two weeks.

The company secured EU approval for its acquisition of Orange Austria two years ago with similar concessions.

The EU competition authority opened an extensive investigation into the O2 Ireland takeover more than three months ago.

It also expressed worries about the effect on O2's network sharing agreement with the third biggest operator, Eircom's subsidiary Meteor.

 It has set a 24 April deadline for its decision.

Hutchison confirmed it has not offered any concessions to regulators up to now.

"We haven't put any remedies forward; whatever is being said is speculative. Hutchison has said that it is very happy to produce strong remedies as it wants a positive outcome as soon as possible," said company spokesman Neil McMillan.

The company set out the case for allowing its O2 Ireland deal before senior Commission officials and national competition officials at a closed door hearing yesterday.

Executives from Eircom, Vodafone, Tesco Ireland, which runs a virtual mobile network here, UPC-owner Liberty Global and BT Communications Ireland also attended the session.