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Hutchinson’s $1bn takeover of O2 Ireland gets EU approval

Irish regulator Comreg admits concerns on deal.

By Vinod

The EU has approved the proposed $1bn takeover of O2 Ireland by Hutchinson Whampoa, clearing the way for one of the nation’s largest ever telecoms deals.

The Hong Kong-based operator, best known for being the parent company of mobile network Three, will pay €850 million to Spanish telecoms company Telefonica for its O2 Ireland subsidiary, currently the second-largest operator in the country.

The company will now merge its operations in Ireland, where Three is the fourth-largest operator, to create a new network with around 40% of the total market share in the country, over two million customers.

"With the combined strengths of the two businesses, Three 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", Robert Finnegan, Three CEO, said in a statement.

He added that the deal, originally declared in June 2013, would enable it to invest in building, "a state-of-the-art 4G network, delivering very real benefits to customers in urban and rural areas throughout the country".

The deal will cut the number of mobile operators operating in the country from four to three, with the new operator running alongside Meteor and Vodafone, with the latter still remaining the largest provider despite the proposed merger.

However, the Irish communications regulator Comreg has raised concerns about the deal, saying that it could cause "serious concerns" regarding the competition between providers in the country, with customers facing rising bills due to a lack of healthy competition.

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The European Commission had been reviewing the deal since last November, and had admitted concerns that the merger "would have removed an important competitive force from the Irish mobile telecommunications market to the detriment of consumers."

In a statement on the deal, Comreg said it believed that these concerns would not be fully addressed, and that "significant negative consequences for Irish consumer welfare may result".

However, EU Competition Commissioner Joaquin Almunia said he believed that the deal would not cause such effects, highlighting that Hutchinson had committed to selling up to 30% of the merged company’s network capacity to two mobile virtual network operators (MVNOs) in order for the deal to be cleared.

"It is essential that healthy competition is preserved in mobile telecoms markets. The commitments offered by Hutchison 3G ensure that Irish consumers will continue to enjoy these benefits," he said.

Hutchison, controlled by Asia’s richest man, Li Ka-shing, currently has operations in six European countries.

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