Hutchison ‘ready to sell spectrum to get O2 Ireland’

Hutchison's Three Ireland is prepared to sell radio spectrum and continue a network sharing deal with a rival in order to win EU approval of its €780 million bid for Telefonica's O2 Ireland, a source familiar with the matter has said.

Hong Kong-based conglomerate Hutchison Whampoa, controlled by Asia's richest man, Li Ka-shing, wants to strengthen its position in Europe where it operates in six national markets, and the lengths to which it is going to secure acceptance of the Irish deal is a telling sign of how tough the European Commission will be on telecoms mergers.

That rigour on the part of the EU's competition regulators could also have implications for a bigger deal in Germany, where Telefonica Deutschland wants to buy KPN's E-Plus for €8.6 billion.

Adding O2 would make Hutchison Whampoa Ireland's second biggest mobile operator behind Vodafone, but it has raised fears that a reduction in the number of network operators from four to three could lead to higher consumer prices.

The source saidHutchison will guarantee to keep in place a network sharing agreement with Eircom in an offer to be submitted to the European Commission within two weeks.

The company secured EU approval for its acquisition of Orange Austria two years ago with similar concessions.

The EU competition authority opened an extensive investigation into the 02 Ireland takeover more than three months ago.

It also expressed worries about the effect on 02's network sharing agreement with the third biggest operator, Eircom's subsidiary Meteor. It has set an April 24th deadline for its decision.

Hutchison confirmed it has not offered any concessions to regulators up to now.

“We haven’t put any remedies forward; whatever is being said is speculative. Hutchison has said that it is very happy to produce strong remedies as it wants a positive outcome as soon as possible,” said company spokesman Neil McMillan.

The company set out the case for allowing its 02 Ireland deal before senior Commission officials and national competition officials at a closed door hearing yesterday.

Executives from Eircom, Vodafone, Tesco Ireland, which runs a virtual mobile network in Ireland, cable operator Liberty Global and BT Communications Ireland also attended the session.

Reuters