Hutchison Says Spectrum Change May Cause Consolidation

Hong Kong billionaire Li Ka-shing’s Hutchison Whampoa Ltd. (13) said U.K. regulator Ofcom’s decision to open more frequencies for fast-Internet technology could distort the mobile-phone market and may lead to further consolidation.

Spectrum that was restricted to voice phone calls and text messages using earlier 2G technology is now also available for mobile operators to offer wireless Internet and other high- capacity data services, the regulator said in a statement today. The move is unlikely to distort competition, Ofcom said.

“Ofcom and the government are jeopardizing the whole competitive environment that the 3G auction in 2000 started to establish,” Kevin Russell, chief executive officer of Hutchison’s 3 U.K. unit, said in an e-mail. “If the government and Ofcom get this wrong, further consolidation could result.”

U.K. operators including the newly merged mobile-phone units of Deutsche Telekom AG (DTE) and France Telecom SA are seeking access to additional mobile spectrum to cope with increasing demands for data. The merger of the two units to form Everything Everywhere reduced the number of operators to four. The new company, Telefonica SA’s (TEF) O2 and Vodafone Group Plc (VOD) will be able to offer more applications such as video on smartphones after Ofcom’s decision.

Ofcom plans to add frequencies in an auction in the first quarter of 2012, with the bandwidth available for use in 2013, CEO Ed Richards said in November.

Hutchison may quit its U.K. investments unless its 3 U.K. mobile-phone unit is guaranteed equal treatment in the auction of frequencies, the Sunday Times reported Jan. 2, citing British Communications Minister Ed Vaizey.

Hutchison said Jan. 3 it is “committed to its U.K. businesses and plans further investment in the country provided its businesses, particularly telecoms, are allowed to compete fairly.”

To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net.

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