Nov. 7 (Bloomberg) -- Hutchison Whampoa Ltd. faces an in-depth probe by European Union regulators examining its bid for Telefonica SA’s Irish unit, a deal that would combine two of Ireland’s four mobile-phone operators.
The European Commission will rule on the deal by March 24, it said in an e-mailed statement. The sale may reduce options for companies seeking to market services under their own brands using networks provided by mobile operators and hamper smaller rival Eircom Group, the antitrust watchdog said.
“The transaction would combine two of the four mobile networks in Ireland and create a player of similar size to the currently largest operator, Vodafone,” the EU said in the statement.
Billionaire Li Ka-shing’s Hutchison agreed in June to buy O2, Ireland’s No. 2 mobile operator, for as much as 850 million euros ($1.15 billion.) The deal would combine O2 with Hutchison’s Three Ireland, the third-largest wireless carrier. Three Ireland Chief Executive Officer Robert Finnegan said in June that he expected the EU to open a longer probe into the deal.
The transaction “will be good for competition and consumers in Ireland” and Three is “confident that the merger will be approved by the commission,” it said in an e-mailed statement. O2 Ireland referred requests for comment to Three.
Hutchison, the biggest Asian investor in European wireless assets, had to make concessions to EU regulators last year before it won approval to take over Orange in Austria, a transaction that also reduced the number of phone operators. It had to offer radio spectrum and network access to rivals to alleviate antitrust concerns.
The EU’s initial investigation into the Irish deal indicated that shrinking the number of operators to three from four may increase the likelihood that the companies would coordinate their behavior and increase prices, the Brussels-based authority said in the statement.
Hutchison will pay 780 million euros in cash and an additional 70 million euros upon meeting certain performance targets, the companies said earlier this year. The deal will increase Hutchison’s customers in Ireland to about 2 million and its wireless market share to 37.5 percent, the Hong Kong-based company said.
The transaction has the potential to bring Telefonica closer to its goal of cutting net debt to less than 47 billion euros this year. Telefonica is separately seeking EU permission to buy Royal KPN NV’s German E-Plus business, reducing the number of German mobile operators to three.
To contact the reporter on this story: Aoife White in Brussels at firstname.lastname@example.org