Report: Carphone Warehouse plans to launch Irish MVNO

Carphone Warehouse, which is in the throes of a £3.8 billion (€4.7 billion/$6.38 billion) merger with Dixons Retail in the UK, is reportedly on the verge of launching a mobile virtual network operator in Ireland to take advantage of new MVNO rules in this market.

According to the Irish Times, the UK retailer has reached an agreement with Hutchison Whampoa to use the 3 Ireland network. This would make Carphone the second MVNO after Liberty Global's UPC, which is also understood to have reached an MVNO deal in Ireland with the Hong Kong-based company.

Carphone Warehouse did not respond to requests for comments on the reports before publication. The Irish Times said the deal would be announced next week.

Hutchison Whampoa agreed to allow two MVNOs on the 3 Ireland network in order to secure European Union anti-trust approval of its €850 million ($1.1 billion) takeover of O2 Ireland from Telefónica. This was to allay regulatory concerns that a reduction in the number of mobile operators from four to three would have a serious impact on consumer prices and competition.

However, Ireland's telecoms regulator, ComReg, has previously said that the European Commission had done little to protect consumers with its competition remedies.

Eventually, one of the two MVNOs must also be given an option to buy spectrum in order to become a full network operator, although neither Carphone Warehouse nor Liberty Global has a history of operating mobile networks in other markets.

Carphone Warehouse currently operates the UK MVNO Talkmobile on Vodafone's network, while Liberty Global operates several MVNOs under various national cable operators across Europe.

The Irish Times also reported that UPC and Carphone Warehouse have signed fixed-price arrangements with 3 Ireland, meaning they will pay the same amount no matter how many customers they sign up.

This approach has been criticised by some industry experts: Ilkka Aura, the chief commercial officer of Tecnotree, told FierceWireless:Europe that the best approach would be to negotiate a contract on a variable model that is based on how many subscribers an MVNO is able to attract, and then build up the platform as revenue grows.

"If you are only in the margin business you will be squeezed out," added Aura. "Often the margin for MVNOs is brutally low."

Over in Germany meanwhile, sources have told Reuters that Telefónica will win EU approval for its €8.6-billion bid for KPN's German unit E-Plus after agreeing to let smaller rivals use the mobile network of the future merged E-Plus/O2.

This follows reports that Germany's antitrust watchdog, the Bundeskartellamt, remains concerned that a proposed merger between Telefónica Deutschland and E-Plus would be detrimental to mobile pricing competition in the country.

Ratings agency Moody's said last week that conditions imposed by the European Commission on mergers between telecoms operators in the region could limit the competitive impact of consolidation that is desired by operators, and would not ease price competition within markets.

Indeed, planned mergers in Europe that would reduce the number of operators within a market from four to three are proving very divisive: operators say they need consolidation to lessen the impact of ruinous price wars, and in some markets such as France they are backed by government ministers.

On the other hand, regulators continue to worry about the impact that a reduced number of competitors would have on consumer prices.

For more:
- see this Irish Times article
- see this second Irish Times article
- see this Reuters article

Related Articles:
Germany's anti-trust body raises concerns over Telefónica/E-Plus plan
Moody's: M&A may not bring desired benefits for operators
Vodafone, ComReg slam EC for clearing O2 Ireland acquisition
EU clears Hutchison's €780M acquisition of O2 Ireland, with concessions
Report: UPC deal to pave way for EU clearance of Hutchison's Ireland buy

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