UK Authority Weighs Scrutiny of Hutchison Whampoa's O2 Deal
September 16 2015 - 12:00PM
Dow Jones News
LONDON-- The U.K.'s antitrust authority, the Competition and
Markets Authority, said Wednesday it is considering scrutinizing
Asian conglomerate's Hutchison Whampoa Ltd.'s proposed acquisition
of Spanish telecommunications giant Telefonica SA's (TEF.MC) U.K.
mobile operator O2.
The CMA said it may request European Union competition
authorities to refer the case back the U.K. body for an in-depth
inquiry, it said in a statement. The CMA said it is seeking
industry comments on the matter until Sept. 24, including concerns
that the merger of Hutchison's U.K. mobile operator Three and O2
would result in a "substantial" lessening of competition in the
U.K.
Last week, the EU said it would decide by Oct. 16 whether to
clear the deal, which could face resistance from the bloc's
regulators as the continent's consolidation of scattered telecom
operators gathers pace.
Scandinavian telecom operators Telenor ASA (TEL.OS) and
TeliaSonera AB (TLSN.SK) abandoned plans to combine their Danish
operations after failing to secure European antitrust approval,
possibly indicating a tougher approach from EU regulators toward
mergers that reduce the number of mobile-phone operators in
individual European countries from four to three.
At the end of March, Hutchison reached a deal to acquire O2 for
about $15 billion, in a transaction which might help the company to
focus attention on its primary growth markets of Latin America.
The deal for Hutchison would seal Hong Kong billionaire Li
Ka-shing's telecom and infrastructure company as one of Europe's
top wireless providers.
The acquisition would more than triple Three's U.K. subscribers
to 34 million and create the country's biggest mobile operator,
leapfrogging EE--owned by Orange SA (ORA.FR) and Deutsche Telekom
AG (DTE.XE)--which has 28 million, and leaving Vodafone Group PLC
(VOD.LN) at the bottom with 20 million.
Hutchison, whose holdings include telecom assets across Europe
and Asia as well as ports and energy companies, said in January
that it was in exclusive talks to buy O2.
The move came swiftly after BT Group PLC (BT.A.LN), the U.K.
telecom incumbent, chose EE over O2 to potentially cement a
near-$20 billion tie-up. BT's ambition to create a telecom
powerhouse of more than 30 million customers sparked a frenzy of
war-gaming across the U.K.'s telecom and media sectors as firms bid
not to be left behind.
The CMA is screening BT's proposed deal for EE. It said the
transaction may result in less competition given that they are the
largest suppliers of fixed and mobile communications services in
the U.K.
BT says the deal would be good for investment in the industry
and bring consumer choice.
-0---Write to Simon Zekaria at simon.zekaria@wsj.com
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September 16, 2015 11:45 ET (15:45 GMT)
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