French billionaire Xavier Niel held “preliminary” talks with Ofcom, the UK telecoms regulator, about acquiring infrastructure that could become available following the £10.5 billion 3 UK-Telefonica O2 merger.
According to the Financial Times, Niel could use the 3 UK-Telefonica UK deal as a means to launch in the country. Acquiring network assets sold under regulatory pressure would give him an entry strategy to the competitive UK market.
Sharon White, head of Ofcom, is thought to be concerned about the loss of disruptive competition that could follow 3 UK’s merger with Telefonica O2.
And the European Commission is set to publish its objections to the merger shortly and could push for the introduction in the UK of a network-based operator as a remedy.
Niel’s Iliad competes aggressively on price in France, a tactic that has caused much pain to its three incumbent rivals since its 2012 debut. Orange is currently negotiating a merger with Bouygues Telecom in an effort to restore equilibrium to the market.
If Niel performed a similar function in the UK it would ease regulatory concern regarding 3 UK-Telefonica UK but could raise a question in the mind of 3 UK parent CK Hutchison about whether consolidation is such an attractive goal. Or CK Hutchison might try to negotiate conditions to the sale of infrastructure to Niel.
Another possible obstacle to Niel’s entry is the presence of other parties interested in acquiring assets that become available following any 3 UK/Telefonica UK combination. The likes of Sky, TalkTalk and Virgin Media might also want to add mobile infrastructure to their existing businesses.
There was no official confirmation from either Ofcom or Niel.
The French billionaire is ambitious to expand outside his domestic business. Last year he launched an audacious, but unsuccessful, bid for T-Mobile US and has since bought a stake in Telecom Italia.