O2’s CEO has hit back at Ofcom’s criticism of the proposed deal for Hutchison Whampoa to acquire the business from Telefonica.
Speaking to Mobile at a media dinner during the Mobile World Congress event in Barcelona, Ronan Dunne (pictured) responded to the public criticism of the deal from the UK watchdog. Interestingly, Dunne’s criticism of the regulator echoed that of opponent of the deal, the Federation of Communication Services, which also believes that Ofcom is judging the market on an old set of definitions.
‘At the end of the day Ofcom aren’t the ones that are making the decision,’ said Dunne. ‘I don’t believe there is any restriction in the regulator having a view. Every single one of my competitors has expressed a strong view about the transaction – some thinking it’s a superb idea and some thinking that it’s less than a superb idea – so I don’t have any issue with people expressing a view.
‘All I’m saying is that it’s perfectly plausible that there is a different market scenario – one where there is a compelling argument that for competition to remain strong in the UK there needs to be a strong mobile first operator to be a counter balance for a converged offering.’
Dunne explained that in his opinion there was a failure to recognise that consolidation was already transforming the playing field for mobile operators: ‘In the market place in the UK you’ve seen a substantial move towards convergence. Vodafone has acquired Cable & Wireless, Sky has announced its entry into the mobile sector, and BT has bought EE. So the question the regulator has to ask itself is: how do you have a sustainable operating model that delivers choice in the UK?
‘In that context, Hutchison has said we don’t have a sustainable business, with everyone else
scaling up around us – we’re too small. We don’t have enough time to grow organically, so we believe that by acquiring we can create a mobile customer champion in the UK. In that context ,Telefonica has said “we’re a willing seller”; in these circumstances we don’t believe we can make a big enough investment to see a return. But Telefonica is not the one that is making the case to the regulator.
‘I think Ofcom has had no regard to the counterfactual – it assumed that the status quo was OK. But the status quo is the one thing that will not prevail – even as we’ve been talking we’ve seen these material changes that have shaken the market. Since the talks began we’ve seen the BT/EE deal and the entry into the mobile market by Sky, so the counterfactual is that things are changing.’