CK Hutchison offers capacity on merged network to gain regulatory approval for O2 UK purchase

17 Mar 2016

Hong Kong’s CK Hutchison, parent company of British cellco Hutchison 3G UK (Three UK), is reportedly hoping to sway regulatory opinion in favour of its GBP10.5 billion (USD14.8 billion) deal to acquire another UK mobile operator, O2 UK, with a package of remedies.

According to the Financial Times, the package put forward by CK Hutchison includes offering approximately 30% of the capacity on the merged network to rivals with a view to alleviating competition concerns. Such capacity could be awarded to a single rival or split into different lots through a so-called ‘fractional shared ownership’ arrangement which would allow companies to purchase portions of the network. The arrangements are said to have been offered on a permanent basis in order to counter criticism of shorter term contractual deals that sell wholesale access on a network under MVNO agreements. CK Hutchison meanwhile is already said to have lined up possible interested parties, including alternative fixed broadband provider Sky.

CK Hutchison has also offered to divest its 50% stake in virtual operator Tesco Mobile. As reported by CommsUpdate earlier this week, Tesco signalled its intentions to acquire the shares in Tesco Mobile it does not already own at a closed Brussels competition hearing last week, following which it said it could look to secure a long term deal with CK Hutchison for capacity on the merged Three UK and O2 UK networks.

While such proposals would likely increase competition, it has been noted that the package of concessions still falls short of the EC’s demand that a fourth, fully separate mobile network be created. Nonetheless, people close to the matter have claimed that CK Hutchison could offer a ‘starter’ package of spectrum and control of some of the O2 UK cell sites that would, in fact, enable a new mobile market entrant.

United Kingdom, CK Hutchison, Hutchison 3G UK (Three UK), O2 UK