The European Union’s regulator has blocked the $15 billion takeover of British mobile phone operator O2 by CK Hutchison over concerns the deal would have stifled innovation and led to higher prices for consumers.
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The European Commission today dashed any residual hopes that CK Hutchison would be able to create Britain’s leading wireless services company by merging its 3G United Kingdom unit with the O2 business of Spain’s Telefónica (TEF – Get Report) by slapping a veto on the £10.2 billion ($14.9 billion) transaction. “The remedies offered by Hutchison were not sufficient to prevent this”, Vestager said.
O2 had no specific comment to make in regards to the deal but said that its business “had continued to perform well in the market whilst the Commission process has taken place”.
The UK’s communications regulator Ofcom said the decision to block the deal, which would have left the UK with three mobile operators, was the “right outcome” for customers.
Hutchison said it was disappointed by the Commission’s decision on its O2 deal and would consider its options, including a possible legal challenge.
Hong Kong-based Hutchison has attempted to soothe concerns by offering airwaves and mobile masts to rivals, including Sky and Virgin Media, but these have now been rejected. Please see our terms of service for more information.
It would also have dealt with the competition issues arising from a “significant imbalance” in spectrum ownership among the UK’s operators, the spokesperson claimed.
She said the deal would also have hampered innovation and the development of network infrastructure in Britain.
“O2 will ideally still look for a buyer and Virgin Media who are owned by Liberty Global certainly could step in”, said Imran Choudhary, an analyst at Kantar Worldpanel, a consumer research group.
An O2 spokesperson said: “We work in an industry of constant change and have learnt how to manage that change better than most”.
What future for United Kingdom mobile?
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The European Commission has given a thumbs-down to Three’s planned purchase of O2. It also casts serious doubt over the future structure of a European telecoms sector that had banked on the tie-up paving the way to further consolidation.
