The European Commission (EC) will probably soon be faced with another significant merger of mobile operators, this time in the UK. H3G’s proposed acquisition of Telefonica UK will likely pass the Community dimension thresholds, requiring notification to and approval by the EC. Indeed, H3G’s acquisitions of Orange Austria in 2012 and of Telefonica Ireland in 2014 have both required such approval.
The EC last examined a UK mobile sector merger in 2010, when it cleared the joint venture of Orange UK and T-Mobile UK without a second phase investigation. The clearance was subject to remedial divestment obligations to deal with a concentration of spectrum holdings that could be used for 4G (LTE) services (in the 1800 MHZ range), together with an obligation on the merged group to enter into a revised network sharing agreement with H3G. However, the EC stated that the market featured strong competition including a significant number of MVNOs, and that MNOs would not have an incentive to foreclose MVNOs, as they would lose more than they would gain in terms of wholesale revenue, if the MVNOs left the market.
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This article was first published by Telecomfinance and has been reproduced here with permission.