All eyes on Three: Dealer’s react to O2 merger block

All eyes on Three: Dealer’s react to O2 merger block

The failed takeover of O2 by Three owners CK Hutchison has been largely welcomed by dealers in the industry, who now look to see what Three UK will do next.

The European Commission (EC) rejected Hutchison’s £10.5bn bid for O2 after competition
remedies failed to impress. The deal received widespread criticism from UK regulators and industry figures alike.

Speaking to Mobile, Excalibur MD James Phipps said that the level of opposition to the deal meant that the Euro watchdog’s decision came as no surprise. However, he believes that the
spotlight will now turn to Three and what the network’s next moves will be.

It seemed clear that the merger was getting regulatory opposition from the UK and the EU so came as little surprise,’ he said. ‘I would be surprised if a transaction for O2 does not happen with another UK organisation that does not operate a network currently  like Virgin  so it is interesting to see where it leaves Three in the market place. Three seems to not have a diversification strategy, like O2’s digital one or Vodafone’s TV, fixed etc, so you would presume that it will need to look at its organic growth strategy again in light of this knockback.’

For TWL Voice and Data MD Andrew Nicholson, approval on the deal would have had a negative effect on competition. He explained that BT’s successful takeover of EE earlier this
year has already had an impact on market competition, supporting the EC in its move to prevent another merger.

‘The industry needs competition,’ he said. ‘It's healthy for there to be numerous organisations pushing the bar when it comes to product, service and innovation. If the largest players in the telecoms market were to merge, competition would be diluted. However, the merger between O2 and Three did have the potential to create the UK’s one true flagship network.

‘I can understand the European Commission’s blocking on competition grounds, as well as
the Competition and Markets Authority (CMA) in the UK expressing its concerns over the merger. We saw competition in the market place reduce last year with BT’s acquisition of EE. The merger between O2 and Three would leave the UK mobile market with just three large operators along with Vodafone.’


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