3 Ireland offers to set up new mobile operator if EC clears O2 acquisition

Hutchison Whampoa's Republic of Ireland operator, 3 Ireland, would establish a ready-made fourth mobile operator in the country if the European Commission (EC) approves a €780 million ($1 billion) acquisition of Telefónica's local O2 business.

3 Ireland has offered to set up a new mobile operator in the country using some of its existing spectrum--including some LTE frequencies--and an initial batch of subscribers, in an attempt to ease EC concerns about a reduction in the number of mobile network operators in the country, the Irish Times reported.

The planned acquisition of O2 Ireland would cut the number of operators from four to three. The reduction was one of the main objections voiced by the Commission over the deal in a statement in January.

3 Ireland is also offering to maintain a network-sharing agreement between O2 Ireland and Meteor, the mobile network run by incumbent Eircom, to address another of the EC's concerns, the Irish Times added.

Ireland's other mobile operators and regulator ComReg are due to be consulted on 3 Ireland's proposals ahead of an EC decision on the acquisition, which is due mid-May.

Ratings agency Moody's Investors Services this week said the Irish deal is as important to telecoms mergers and acquisitions in Europe as the proposed purchase of German operator E-Plus by Spanish giant Telefónica.

In a report, the company predicted a wave of in-country consolidation deals if EC competition authorities clear the two deals, but only in markets with four major operators.

Ivan Palacios, Moody's vice president, said in-country acquisitions "will provide substantial cost savings and should lead to a more rational competitive environment." He added, however, that competition authorities are only likely to "allow deals which reduce the number of market players to three from four," and are likely to reject acquisitions in markets where three or fewer companies operate.

Moody's added that cross-border mergers and acquisitions among European operators are less likely, due to a lack of synergies.

For more:
- see this Irish Times article
- see 3 Ireland's response to EC concerns
- see this Moody's press release

Related Articles:
Hutchison Whampoa's 3 Group bucks downward trend in Europe
Report: EU to raise objections to Telefónica's E-Plus deal
3 Ireland plans remedies for EU concerns on O2 merger
EC keeps grip on Telefónica Deutschland, E-Plus probe
3 UK CEO: Britain could manage with 3 mobile networks