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Hutchison EU Offer Said to Help Smaller Rival to Be Irish No. 4

Hutchison Whampoa Ltd. (13) is offering to help a smaller rival become Ireland’s fourth mobile operator in a bid to win European Union approval for its acquisition of Telefonica SA (TEF)’s O2 Ireland unit, according to two people familiar with the matter.

Hutchison’s offer to EU regulators, sent today to rivals and customers to review, would cede spectrum and network access to a so-called mobile virtual network operator, the people said on condition of anonymity because the offer isn’t public. The offer would enable the competitor to move from piggybacking on others’ services to running its own infrastructure within three years, the people said.

Concessions by billionaire Li Ka-Shing’s Hutchison are designed to overcome EU objections to the combination of two of Ireland’s four mobile operators that currently run their own networks.

Telefonica’s separate plan to merge its German unit with Royal KPN NV (KPN)’s E-Plus is another tie-up that’s testing how far regulators are willing to allow consolidation in the telecommunications industry. Joaquin Almunia, the EU’s antitrust chief, has said such deals can’t come at the expense of higher prices for consumers.

Market Testing

“Three Ireland can confirm that they have submitted remedies and that these have been sent to interested parties for market testing,” Hutchison’s Three Ireland said in an e-mailed statement. “We hope to reach final agreement with the Commission and gain clearance of the acquisition as soon as possible.”

Hutchison won’t give wireless spectrum to Vodafone Group Plc (VOD), which runs Ireland’s biggest operator, and Eircom Group Ltd, the people said.

The company will maintain an existing network-share agreement with Eircom allowing both companies to share buildings that host mobile masts and broadcasting equipment. A new smaller competitor would share Hutchison’s network in urban areas and have a roaming pact to use its services in rural areas.

Hutchison held talks with Liberty Global Plc (LBTYA)’s UPC to allow it become a virtual operator buying wholesale access from Hutchison’s network to sell phone services to customers, three people said earlier this month. UPC declined to immediately comment.

Antoine Colombani, a spokesman for European Commission, declined to comment on the market test. O2 Ireland and Vodafone’s Irish unit didn’t immediately respond to requests for comment.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net Peter Chapman, Robert Valpuesta

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