Sunday 26 October 2014

Bitter war of words erupts between 3 and Vodafone

Published 30/05/2014 | 02:30

Vodafone
Vodafone
Vodafone
3 Ireland and Vodafone have a war of words

A WAR of words, compounded by the threat of legal action, has opened up between 3 Ireland and Vodafone over the European Commission's decision to grant 3 Ireland permission to buy O2 Ireland in a €780m deal.

In an angry reaction to the decision, Vodafone said it was considering legal action here and in Europe, accusing the European Commission of allowing 3 Ireland to take investment shortcuts in the Irish market.

"The Commission's decision points in the wrong direction by favouring operators who do not invest in infrastructure over those that do," said a spokesman for Vodafone Ireland.

Vodafone also said that the creation of a new 'full' mobile network operator, included in the deal to safeguard competition, was destined to flop.

"Given the investment required... Vodafone seriously doubts that this network option will ever be taken up," said the spokesman.

"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."

However, the chief executive of 3 Ireland hit back at Vodafone Ireland, accusing the operator of hypocrisy.

"3 notes that spectrum disparities were never a concern for Vodafone when it held over twice 3's spectrum capacity over the past decade," said Robert Finnegan.

"3 is not surprised at Vodafone's response to heightened competition in the mobile market. Clearly a strong number two mobile operator of scale, together with two new MVNOs, must be unsettling for Vodafone after years of unchallenged market dominance."

The spat comes after Ireland's communications regulator expressed its dismay at the European Commission's decision to allow the acquisition to proceed.

Warning of "significant negative consequences for Irish consumer welfare", a spokesman for Comreg said that the compromise deal "appears inadequate and ineffective to address the serious competition concerns and consumer harm identified by the European Commission, for example higher prices".

And in a move that could keep the row going longer, Comreg says that it is to publish correspondence between the various parties.

"ComReg remains of the strong view that the behavioural commitments are insufficient to address the structural competition deficit identified," a spokesman said.

"However, in the interests of contributing to an open market, ComReg will publish non-confidential versions of its key substantive submissions to the European Commission on the proposed acquisition in due course."

The deal will put the new post-merger operator just behind Vodafone, at 37pc of the Irish market.

It will also bring 3 closer to profitability, with the company having sunk €1.1bn into its loss-making Irish operation in its 10-year stint here.

Some analysts feared that Hutchison Whampoa, which has invested €1.1bn in its loss-making Irish operator over the last 10 years for a return of just 8pc market share, might leave the Irish market if the European Commission had not given the go-ahead for the deal.

Irish Independent

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