3 Ireland offers help to set up new operator in bid to buy 02
3 Ireland has offered to help set up a new mobile phone operator in Ireland in a key concession to persuade a sceptical European Commission to allow it to buy O2 Ireland for €780m.
Under the proposed deal, 3 Ireland would give the new operator control over some of its own network and an option to acquire some of its customers.
It would also give the new operator the option of taking some of its valuable 4G spectrum, elevating the new entrant above the status of so-called piggyback operators such as Tesco Mobile.
The most likely new operator would be UPC, which is currently discussing a new mobile operator set-up with 3 Ireland.
The move is being advanced by 3's owner, Hutchison Whampoa, as doubts persist over whether the European Competition Commissioner, Joaquin Almunia, will sanction 3's €780m takeover bid for Ireland's second biggest mobile operator.
The commissioner has put forward concerns that reducing the number of network mobile operators from four to three would damage competition here.
3 Ireland will also commit to continue a network-sharing agreement that Telefonica's O2 Ireland has with Eircom's mobile operator, Meteor. The European Commissioner has expressed fears that such an agreement might be abandoned if 3 acquires O2 Ireland.
The details of the concessions contained in 3's offer are to be circulated among key Irish mobile competitors, including Eircom and Vodafone, which has lobbied against the takeover deal proceeding.
The concessions will also be sent to the telecoms regulator, Comreg. All parties are expected to submit responses to the concessions within the next several weeks, before a final determination by the European Commission in May.
The offer to set up a new mobile operator in Ireland with a 'starter pack' of customers, spectrum and network control will be viewed as an attempt to assuage European Commission fears about reducing the number of 'full' operators here.
Ireland has four 'full' network-owning operators and a number of smaller, 'virtual' operators such as Tesco Mobile and Lycamobile. This would shrink to three 'full' network mobile operators under the €780m O2 acquisition.
The Commission set out similar competitive objections in a takeover bid in Germany where Telefonica is seeking to buy KPN-owned E-Plus for €8.6bn. The Commission argued that reducing the number of operators from four to three could result in higher prices for mobile phone users.
"Three Ireland can confirm that they have submitted remedies and that these have been sent to interested parties for market testing," said a spokesman for 3 Ireland.
"We hope to reach final agreement with the Commission and gain clearance of the acquisition as soon as possible."