CK Hutchison pitched three promises to the European Commission in a bid to gain approval for its Telefonica O2 UK bid, but it’s unclear if it’s gone far enough to win the backing of EU competition chief, Margrethe Vestager.
The statement by group co-managing director Canning Fok (pictured), who is also chairman of 3 UK, contained criticism of Sharon White, CEO of UK telecoms regulator Ofcom, “who felt the need to go public with her conclusions about the effects of CK Hutchison’s proposed acquisition of O2, without having asked for or heard our views in response to her concerns.”
White, who has been bearish on a merger of 3 UK and Telefonica O2, laid out her views in the Financial Times.
However, to succeed Hutch’s bid must convince the European Commission that UK consolidation is a price worth paying.
Fok’s statement has three promises. Firstly, a merged 3 UK-O2 will not raise prices of voice, text or data for a period of five years following the merger.
The second promise is that the combined entity will invest £5 billion over the next 5 years, at least 20 per cent more than would have been invested by the companies separately, the statement argues.
The third promise is particularly interesting as Fok said 3 UK/O2 will enable “other meaningful competitors” to enter the UK market using its network.
Hutchison will offer for sale “”fractional shared ownership interests in our network capacity” to rivals, said the statement.
Vestager is known to favour introducing network-based competitors to counterbalance consolidation but would closely scrutinise any strings attached to such an arrangement. How the setup outlined by Fok would work in practice is unclear and will attract close attention of the regulator.