If you’re a resident of the United Kingdom, the carrier names you hear ringing from across the Atlantic seem slightly less important compared to the likes of Three, EE, or O2. The last of these in currently involved in a huge, that’s £10.3 billion, purchase-and-sale deal with Hutchison Whampoa. O2, for those who might not know, is the UK wireless service of Telefonica, a Spanish company. Telefonica is in the process of selling O2 to the Hong Kong-based Hutchison Whampoa, for the aforementioned amount, which translates to $16 billion for the folks more comfortable with the U.S. dollar. What’s the big deal, aside from the obvious? The EU is probing into the deal to make sure it doesn’t cause any competition problems.
As much as many people, especially those participating, wish that mergers between networks could be easy, the problem of unfair mergers and possibly mono- or duopolies exist, and the EU’s competition authority is set to begin the preliminary look into the possible merger. The date has reportedly been set for October 16 for the investigation to start, and these type of investigations tend to last a few months at least. What does the merger mean though? Here’s a quick rundown.
If the deal is approved, which will take a while since the case before the competition authority is reportedly rather complex, Hutchison’s O2 acquisition will make it the largest carrier in Britain, meaning a lot of control and influence of coverage and pricing, which can be possibly problematic. The merger, while large and expensive, as well as important enough for the EU competition authority to be looking into performing a full and extensive amount of research which would consume around five months.
If the merger faces problems, Hutchison is reported to be ready and willing to sell off part of the total network’s spectrum to have the merger be approved. This merger could very well run into problems courtesy of the EU competition authority, especially given that in recent times TeliaSonera and Telenor have abandoned plans to merge within Denmark’s borders. The deal was called off, according to the two companies, because the European regulation was getting problematic. It will be interesting to see if the EU allows this large-scale merger, as well as the outcomes for not only competition, but also the customers.