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Hutchison Three offers concessions to EU on its bid for O2


O2 advertsing signage

HUTCHISON'S Three Ireland is prepared to sell radio spectrum and continue a network-sharing deal with a rival in order to win EU approval for its €750m bid for Telefonica's O2 Ireland, a source familiar with the matter has said.

Hong Kong-based conglomerate Hutchison Whampoa, which is controlled by Asia's richest man, Li Ka-shing, 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 are a sign of how tough the European Commission will be on telecoms mergers.

That rigour 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 €8.6bn.

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 network operators from four to three could lead to higher consumer prices.

Hutchison Whampoa has hinted that it will pull out of Ireland if its fails – a move that could see the departure of one of the biggest infrastructure investors in the world.

"Hutchison will offer to sell spectrum to MVNOs (mobile virtual network operators) and guarantee to keep in place a network-sharing agreement with Eircom," the source told Reuters, adding that Hutchison would submit its offer to the commission 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 02 Ireland takeover more than three months ago.

It also expressed worries about the effect on 02's network-sharing agreement with the third-biggest operator, Eircom's subsidiary Meteor. It has set an April 24 deadline for its decision.

Hutchison confirmed that 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 02 Ireland deal before senior commission officials and national competition officials at a closed-door hearing on Tuesday.

Executives from Eircom, Vodafone, Tesco Ireland, cable operator Liberty Global and BT Communications Ireland also attended the session. (Reuters)

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