2/3/2016 5:45:42 PM
What should Three and O2 be forced to do?
As the European watchdog’s decision on the merger draws ever closer Mobile examines the possible deals on the table for the two operators.
Most network operators will tell you that the radio waves they own are their most valuable assets. It’s no surprise then that regulators have frequently divvied them up when they’ve wanted to change the market dynamic. In the UK much was made about Three’s entrance into the market and the spectrum they purchased to really make its mark. It seems pretty likely that the European Commission (EC) will suggest that the combined Three and O2 business must give up some of its spectrum. In a similar merger case in Denmark it ruled that the two operators must give up enough spectrum to allow a new entrant into the market, a decision which subsequently caused both parties to abandon the merger.
O2 has frequently argued that the merger could be used to foster greater competition in the MVNO market, a point that was reinforced by Sky recently. Both companies have been busy picking up business from MVNO’s since takeover talks began. But it remains to be seen whether this will have any impact on the EC’s thought process. It would be the lightest touch of all the options and almost certainly the most appealing to Three and O2.
There is the unlikely scenario that that the deal will be rejected outright. The prospect of the smallest operator buying the largest is one which Ofcom has clearly stated its opposition to. If their views are taken to heart by the Commission there is the possibility that it could rule outright to reject the deal. The sheer number of customers that the new business would have is a problem that the regulatory body may feel is too difficult to redress.