CK Hutchison inks mobile capacity deals with Sky, Virgin Media to gain approval for Three UK/O2 UK deal

8 Apr 2016

CK Hutchison, owner of the British mobile operator Three UK, is said to have inked deals worth a total GBP3 billion (USD4.2 billion) offering network capacity to both Sky and Virgin Media as it seeks to gain approval for its acquisition of rival cellco O2 UK. According to British broadsheet The Telegraph, the Sky and Virgin Media’s capacity deals are designed to help persuade regulators that competition in the UK mobile sector will be preserved in the wake of proposed merger, though it has been suggested that the Hong Kong-based firm’s failure to strike a deal for the sale of assets which would enable the creation of a fourth fully-fledged network operator could yet stymie its acquisition plans.

Regarding the alleged deals, it is understood that Sky has agreed to acquire 20% of the enlarged capacity of the combined Three UK/O2 UK network for more than a decade, should the merger be allowed. While the alternative broadband and pay-TV provider plans to launch a mobile service this year regardless of the outcome of the Three UK/O2 UK deal, already having a wholesale deal with O2 in place, it is believed that the new agreement with CK Hutchison will allow Sky to cut its costs. Meanwhile, Virgin Media is said to have agreed that it could take a further 10% of the merged network capacity, though it is noted in the report that this deal is not a formal part of the package of concessions submitted to competition watchdogs.

European officials now have until 15 May to decide whether to approve or reject the acquisition of O2 UK by CK Hutchison.

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