Three makes more EU concessions to push O2 deal through

Three UK is set to offer further concessions to Europe in a final bid to get approval for its £10.5bn acquisition of O2 UK, according to reports.

Hutchison is prepared to give away network capacity to small UK mobile players as it hopes to allay fears over the effect of its merger on market competition, according to the FT. Sky and Virgin Mobile are two players it claims will benefit from the concession, as Three has proposed allotting 20% of its existing network capacity to Sky – which would be a new entrant in the mobile space – and 10% of the combined network’s capacity to Virgin Mobile.

The concession would see Sky have the chance to enter to the UK market as an MVNO. Incidentally, Sky confirmed an MVNO agreement in January last year with, as it happens, O2 UK. Three’s proposal to Brussels could well be committing to delivering on pre-existing agreements. According to Sky, the terms of the partnership agreement will see Telefónica provide wholesale access to 2G, 3G and 4G services to Sky over its nationwide network.

Three has already submitted a set of promises in a bid to seduce the European Commission, after Ofcom Chief Executive Sharon White publicised her concerns over the deal. In the previous set of promises, Three promised to freeze prices for five years – a comment which raised eyebrows with Vodafone CEO Vittorio Colao, who implied the comment was somewhat disingenuous in the face of perpetually downward-spiralling prices.

Other concessions allegedly put forward by Three include the liberation of the Tesco Mobile brand, which is currently half-owned by O2. It would look to sell off its 50% stake in the MVNO, while also giving it some more network capacity. Three’s also pledging to continue ploughing investment into the two main mobile network infrastructures in the UK – one used by EE and Three, and the other by O2 and Vodafone.

Analysts at the time suggested further concessions would be necessary in order to assuage the concerns of competition commissioner Margrethe Vestager, and so it looks to have happened.

Three declined to comment.

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