Sunday 17 December 2017

3 Ireland gets green light for €850m O2 takeover

3 Ireland CEO Robert Finnegan
3 Ireland CEO Robert Finnegan
Adrian Weckler

Adrian Weckler

3 IRELAND has received the green light from the European Commission to buy O2 Ireland from Telefonica in a deal worth up to €850m.

Announcing its approval for the takeover, the Commission said that it was conditional on 3 Ireland helping two new mobile competitors to compete in the Irish market, with one of them given the option to become an equal player with its own wireless infrastructure.

3, which is owned by Hutchison Whampoa, is now expected to push ahead with a separate deal with UPC that will see the cable broadband operator launch a new mobile service on 3's network. It will also be required to dedicate 30pc of the merged company's network capacity to the new operators.

The deal is also conditional on 3 offering improved terms to Meteor on network-sharing, which will speed up Meteor's 4G roll out.

The acquisition will take 3's market share to 37pc with more than 2 million active users. The two companies had combined revenues of €736m in 2013, which compares to 3's revenue of €180m in 2013 on a standalone basis. It will also mean that O2 assets, such as branding for the Point Depot theatre, will now revert to 3.

Welcoming the decision, 3's chief executive, Robert Finnegan said: "With the combined strengths of the two businesses, 3 will have the scale and financial strength necessary to compete more aggressively against the number one in the market. Our ability to invest coupled with the combined subscriber base of both businesses will create new competitive dynamics in the Irish telecoms market," he said.

"It leaves 3 optimally positioned to become the number one player by providing the best value and service to our customers."

He added that Hutchison Whampoa has so far invested more than €1.1bn in its Irish business and that it planned to invest €300m over the next three years in a new 4G network. Irish mobile operators have seen average monthly revenue figures falling by 50pc in the last six years. Previously lucrative services such as roaming fees and SMS texting charges have fallen dramatically as increased European regulation and new technology from services such as Whatsapp have eaten away operator profits.

Despite the fall in telecoms revenue, European competition commissioner Joaquin Almunia said that Ireland's telecoms market needed to be protected from a decline in competition here.

"A relatively high proportion of Irish inhabitants live in rural areas, raising challenges for the rollout of mobile telecoms networks," he said.

"In addition, the market is characterised by high entry barriers for new competitors and no countervailing buyer power from end consumers. Therefore, the Commission was concerned that the merger, in its original form, would have led to higher prices and less competition. However, the commitments given by 3 remove the Commission's concerns."

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