Three proposes new network operator in O2 takeover

Three Ireland has proposed assisting the set up of a brand new mobile network operator as part of a last-ditch bid to smooth the passage of its €850 million takeover of O2 Ireland past European competition regulators.

The European Commission yesterday asked Three's market rivals in Ireland for their views on its final set of competition remedies, which were submitted by Three to the commission on Monday.

The proposed remedies were also sent for comment yesterday to communications regulator Comreg and government officials, in a process known as “market testing”.

The commission has expressed concern about the takeover because it would reduce by one the number of network operators in Ireland, which stands at four.

Piggyback
In the package of remedies, Three says it will initially offer a mobile network virtual operator (MVNO) to a new market entrant. It is believed to already have an agreement in place with cable operator UPC for an MVNO, which is where a new player piggybacks on the network of an existing operator. UPC would bundle mobile services into its television and broadband packages.

In an effort to address the commission’s concerns, Three has suggested it will offer a “glide path” to the new MVNO to help it become a fully-fledged network operator.

Ready-made customer base
The MVNO would be offered the option of acquiring a ready-made customer base of between 50,000 and 75,000 users from the merged O2-Three entity. It is believed many of these would be drawn from O2's existing MVNO, called 48.

Three has proposed that it would also transfer a certain amount of digital spectrum to the MVNO, if the new operator chose to become a fully fledged network business.

It would also offer the new operator a network-sharing arrangement in urban areas and a national roaming deal on Three’s network.

It has told the commission that it will guarantee continuance of a network-sharing arrangement with Eircom, which struck the deal with O2.

Three declined to comment on the details of its remedies, but said: “Three Ireland can confirm that it has submitted remedies and that these have been sent to interested parties for market testing. We hope to reach final agreement with the commission and gain clearance for the acquisition as soon as possible.”

The commission has set a final date of May 20th to clear or reject the deal.