Report: UPC deal to pave way for EU clearance of Hutchison's Ireland buy

Hutchison Whampoa could be on the verge of securing European Union regulatory clearance for its planned €780 million ($1 billion) acquisition of O2 Ireland if it signs a deal soon that would help cable operator UPC launch a mobile virtual network operator to function as a new fourth player, reports say.

Quoting unnamed sources close to the situation, Reuters said the Hong Kong-based company is in the last stages of negotiation with Liberty Global-owned UPC to enable it to offer mobile services using the network of 3 Ireland. That would then maintain the number of mobile operators in Ireland at four following Hutchison's acquisition of O2 Ireland from Telefónica.

This would satisfy anti-trust regulators at the European Commission, reports say, as they are concerned about mergers in Europe that would reduce competition within national markets. The Commission has set a June 20 deadline for its decision on the Irish deal, and has not commented on the UPC report, Reuters said.

The European Commission is currently considering both the Hutchison Whampoa deal in Ireland and Telefónica Deutschland's proposed acquisition of KPN's E-Plus. The proposed acquisitions would cut the number of operators in Germany and Ireland from four to three.

Telefónica Deutschland has also reportedly offered concessions to gain clearance that may have included a commitment to cede spectrum to allow for a new entrant and thereby maintain the number of German operators at four.

Hutchison secured EU approval for its Orange Austria takeover two years ago with similar concessions, but the price rises in the Austrian market since that point have caused concern among regulators.

Indeed, reports on Monday said Telekom Austria is struggling to deal with a wave of contract cancellations in the wake of its announced plan to raise tariffs for around a million customers by €1.90 ($2.60) per month.

For their part, operators across Europe are calling for greater consolidation and in many markets see four operators as destructive for future network investments. That argument is particularly vocal in France, which has endured a gruelling price war for the last two years and now wants to limit competition in the market. Latest reports say that Orange is now talking to Bouygues Telecom about a possible takeover.

However, the European Commission's competition chief Joaquin Almunia last week rejected calls from politicians for changes to current merger rules for the telecoms sector, saying such amendments would not create the truly single telecoms market that the region needs.

For more:
- see this Reuters article
- see this separate Reuters article

Related Articles:
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Merkel backs calls for European telco consolidation
Orange reportedly in talks with Bouygues as Numericable bids for Virgin Mobile France
For European telecoms operators, 4 is a crowd
Telefónica Deutschland remains confident on E-Plus approval in Q2

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