Three to buy O2 Ireland for €780 million

watty · 26-02-2014 11:48pm

The departure of Hutchinson Whampoa would also be bad news for Irish industry at a time when money is still scarce. The Hong Kong-based company has been a significant investor in infrastructure projects in other countries where it operates.

But not really here as they were in breach of licence for NOT rolling out prior to NBS. The subsequent roll out was mostly financed by Irish Gov. and EU using money intended for Broadband. (NBS). Not one Broadband connection ever supplied. Their aggressive mis-selling of Mobile as Broadband I believe has inhibited investment in Fixed Broadband, especially Rural FWALA.

So has someone decided that four operators is the minimum? I hope not. But it's surely not the only basis to block the O2 takeover?

The Cush · 06-03-2014 1:23am

Irish Times article from earlier this week - http://www.irishtimes.com/business/sectors/technology/cantillon-eircom-sits-on-the-ransom-strip-for-the-proposed-three-o2-merger-1.1711430

It has become increasingly obvious that Three and its parent Hutchison Whampoa will not get its €850 million offer for O2 past European regulators unless Eircom gives its imprimatur. Eircom’s approval is its ransom strip.

And, boy, is the former state incumbent determined to wring as much as it can out of the deal.

...

European regulators are now stalling on approving the deal because of nervousness over reducing network operators from four to three.

Three's concession to Eircom

Objections from Vodafone, the long-time market leader, carry far less weight then objections from Eircom/Meteor, which would be much more likely to be disenfranchised by a merger of O2/Three. So what has it got so far?

Three has told the commission it is prepared to guarantee Meteor the continuance of a network-share deal to keep its costs down.

It has also floated the idea of transferring some of O2/Three’s valuable spectrum to Meteor, and the word is that it will do this for free.

There was even talk recently that Three had considered a cash payment to Meteor for its approval, although sources on all sides privately deny this.

Together with its commitment to offer cheap network access deals to new operators, all this means that the total cost to Hutchison of acquiring O2 could nudge towards €1 billion.

The Cush · 06-03-2014 1:44am

This from Reuters yesterday afternoon - http://uk.reuters.com/article/2014/03/05/uk-hutchison-telefonica-eu-idUKBREA241II20140305

The European Commission confirmed yesterday that Hutchison Whampoa has offered concessions for its bid for 02 and also extended the decision deadline to May 19th.

(Reuters) - Hutchison Whampoa has offered concessions to counter European Union regulatory concerns about its proposed $1 billion (597 million pounds) bid for Telefonica's 02 Ireland unit, the European Commission said on Wednesday.

Hong Kong-based conglomerate Hutchison, controlled by Asia's richest man Li Ka-shing, is seeking to boost its position in Europe via a series of acquisitions.

Its latest takeover offer however has fuelled regulatory worries that the deal, which reduces the number of mobile telephony operators from four to three in Ireland, may lead to higher consumer prices.

Hutchison offered concessions on Tuesday, European Commission spokesman for competition policy, Antoine Colombani, said, adding that the deadline for a decision on whether to clear the deal or not had been extended until May 19.

A Hutchison spokesman declined to comment.

Hutchison is prepared to sell radio spectrum and continue a network sharing agreement with rival eircom's subsidiary Meteor, the third biggest operator in Ireland, a source familiar with the matter told Reuters last month.

Vodafone is the market leader in Ireland.

The Commission's decision is expected to show how tough it will be on a much bigger telecoms deal in Germany where Telefonica Deutschland wants to buy KPN's E-Plus unit for 8.6 billion euros.

clohamon · 06-03-2014 10:04am

I can't see how any of the mentioned remedies protect customers. It's more like racketeering.

bealtine · 06-03-2014 10:55am

clohamon wrote: »

I can't see how any of the mentioned remedies protect customers. It's more like racketeering.

Racketeering is a rather dirty word but rather apt really.

The EU Commission (or indeed any regulator) is not interested in consumers at all they are just consumers of services with very few rights, the job of the regulators is to make sure that companies are doing well at the expense of consumers and as long as consumers can pay all is good in the world

watty · 06-03-2014 7:24pm

I think the EU commission cares slightly more than Ofcom or Comreg though.
But they are all examining the wrong issues.

The Cush · 21-03-2014 9:53am

3 Ireland offers help to set up new operator in bid to buy 02 - Irish Independent

Three proposes new network operator in O2 takeover - Irish Times

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.

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.

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.

clohamon · 21-03-2014 11:38am

The Cush wrote: »

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.

Nothing new here; this contingent agreement with UPC was already in place. There's nothing to suggest that UPC wants to become a 'fully fledged' MNO.

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

That's almost a definition of the opposite.

The Cush · 21-03-2014 11:47am

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.

I assume if the MVNO decides not to become a full network operator Three keeps the spectrum under their proposal, win win

bealtine · 21-03-2014 8:06pm

The Cush wrote: »

I assume if the MVNO decides not to become a full network operator Three keeps the spectrum under their proposal, win win

win win for 3...lose lose for consumers

The Cush · 05-04-2014 12:04am

THE European Union has paused its review of Hutchison Whampoa's bid to buy O2 Ireland as the regulator seeks revisions to concessions the company made to win approval for the tie-up.

3 Ireland owner Hutchison and the EU agreed on a short suspension to allow the company to work on changes to the company's offer and for the European Commission to examine them, 3 Ireland said in a statement.

The EU previously had a May 19 deadline to make a final decision on the deal. "The clock was stopped yesterday until we obtain the information we requested from the parties," Antoine Colombani, a spokesman for the European Commission, said in an email.

http://www.independent.ie/business/irish/in-business-30154003.html

EU regulators stop clock on review of Hutchison, 02 Ireland deal - http://uk.reuters.com/article/2014/04/03/uk-hutchison-telefonica-eu-idUKBREA321HT20140403

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_6992

Deadline suspended under Article 11(3) from 01.04.2014
Commitments submitted in N/2 on 03.03.2014

clohamon · 05-04-2014 10:09am

Sources with knowledge of the case said the company is prepared to cede spectrum and customers to a smaller rival for free and to continue a network sharing agreement with competitor eircom's subsidiary Meteor, the third biggest operator in Ireland.

http://uk.reuters.com/article/2014/04/03/uk-hutchison-telefonica-eu-idUKBREA321HT20140403

How do they choose the customers?

The Cush · 10-04-2014 10:43am

Hutchison 3G gets €780m cash injection for O2 takeover bid

Hutchison 3G's Irish arm has received a €780m cash injection from a newly-formed UK group as it tries to push its planned takeover of O2's operations here over the line. Hutchison 3G has offered to pay €780m for the business.

New filings at the Companies Office show that Hutchison 3G Ireland received €780m within the past three weeks from newly-registered UK firm Hutchison 3G Ireland Holdings.

The transaction was completed on March 24 – just days after 3 Ireland pledged to establish a new mobile operator in an effort to persuade the European Commission to allow it to buy O2 Ireland, which is owned by Spain's Telefonica group.

...

The filings with the Companies Office indicate that London-based Hutchison 3G Ireland Holdings subscribed to 780 million shares in Hutchison 3G Ireland, paying €780m for the shares, which were allotted on March 24. The UK firm was only established in February.

The UK firm's shareholder is Luxembourg-based Hutchison 3G Ireland Investments. Accounts for the Luxembourg firm for 2012 reveal it had outstanding loans paid to an affiliate undertaking amounting to €920.6m at the end of that year. The facilities expire in 2032.

Banjoxed · 10-04-2014 10:44am

If I'm saddled with bloody Three or shunted to bloody expensive Meteor again then I will seek ways to extract myself from the contract. Escalate that query.

RangeR · 10-04-2014 11:21am

clohamon wrote: »

http://uk.reuters.com/article/2014/04/03/uk-hutchison-telefonica-eu-idUKBREA321HT20140403

How do they choose the customers?

It will probably be Three's entire customer base. Isn't this rumoured to be in the region of 20,000?

The Cush · 25-04-2014 1:12am

http://www.independent.ie/business/irish/ec-to-decide-on-o2-deal-by-june-30212590.html

EUROPEAN Commission decisions on Hutchison Whampao's bid for O2 Ireland, as well as Telefonica's plan to merge its German unit with KPN's E-Plus, should come by mid-June, EU competition chief Joaquin Almunia has said.

EU competition authorities have received concessions in both deals and finished market tests for the Hutchison review, Commissioner Almunia told reporters in Marrakesh.

The EU had previously indicated that a decision on the O2 deal here would be made by the end of May. Regulators have suspended that deadline to seek more information.

daithi7 · 26-04-2014 11:06am

watty wrote: »

Yes, it's bad (but not for the reasons that Comreg might suggest), be better the other way round. O2 was owned by a Spanish telecom company with a clue. Three is owned by Hutchinson Whampoa (Hong Kong) who out source almost everything, main support for all countries in India and their only Telecom expertise is selling contracts. Their "3G repeaters" for NBS should have been illegal and their supply of Satellite services particularly inept.

There is Irish expertise to make sensible Engineering decisions, but Three are unlikely to employ it.

Three's strategy of pricing, data caps and marketing of 3G/HSPA data is unsustainable.

But Comreg's only judgement of fitness to hold a 3G licence seems to be paying the fee. Have they ever either had decent licence conditions or properly enforced the conditions that do exist?

The DCENR, or dept of Post & Telegraphs or whatever tf they were called at the time, did a great job under, Lowry of selling the first set of spectrum. That has been severely condemned under a hideously ex pensive tribunal of enquiry already and is the subject of court proceedings that could cost the exchequer an absolute fortune in damages & costs by the beaten consortia bidders.

Meanwhile DOB has deployed the capital he garnered largely because of that bent process wisely in other such transparent regimes such as Jamaica, Haiti, etc. Tipperary North still return Michael Lowry to the dail and the broke, banana republic that is Ireland shuffles on lamely with a Dail full of over paid, over secure, windbag teachers, who can go back to their state backed job, while agreeing to overpaying civil servants by over 40% versus their private sector peers , and granting them (selves) gold plated pensions that Ireland simply cannot afford.

In that context, 3 taking over O2, is small beans in a country that needs a route & branch reform, and had just missed a once in a generation opportunity to make it happen. The troika left saying our civil &, public services, our legal services and our health services were all not fit for purpose. That's still the case.

The Cush · 06-05-2014 9:14pm

From Bloomberg News today - http://www.bloomberg.com/news/2014-05-06/liberty-global-said-to-pave-way-for-hutchison-s-o2-irish-deal.html

Liberty Global's UPC unit is poised to offer mobile phone services in Ireland, according to two people familiar with a transaction that may pave the way for Hutchison Whampoa to win European Union approval to take over Telefonica's O2 Ireland unit.

UPC would add mobile phone services to its existing Irish Internet and cable services, taking up an offer of network access from Hutchison, the people said on condition of anonymity because the offer isn’t public. This would involve UPC initially becoming a so-called mobile virtual network operator piggybacking on Hutchison’s network. UPC could move toward running its own infrastructure in the country within three years, they said.

...

Anna-Maria Barry, a spokeswoman for UPC Ireland, declined to comment, as did Hutchison.

European Commission's provisional deadline for the decision on the merger is now 20th June - http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_6992

watty · 07-05-2014 6:53pm

I wonder what Tesco thinks.

clohamon · 07-05-2014 9:11pm

UPC would add mobile phone services to its existing Irish Internet and cable services, taking up an offer of network access from Hutchison, the people said on condition of anonymity because the offer isn’t public.

According to the Irish Times, UPC had been in negotiations with Three since Nov 2011.

This would involve UPC initially becoming a so-called mobile virtual network operator piggybacking on Hutchison’s network. UPC could move toward running its own infrastructure in the country within three years, they said.

AFAIK UPC do not run a fully fledged MNO anywhere else. So either they think that they can run an MNO more efficiently than O2, Three or Vodafone or they don’t expect the MVNO deal to work out?

Instead of buying a functioning MNO themselves - complete with technical divisions, UPC will be buying some spectrum, and then, apparently, Three will teach them how to run a mobile network - hello? That’s Three btw, who have thrown €1bn at a their Irish operation since 2005 and not made a cent of profit .

Then look at it from Three's point of view. Apparently, they are going to help UPC - a competitor with no customers - to develop a mobile network so as to acquire more customers. Some of those customers will be customers of Three, and the more diligently Three assist UPC, the more its customers that will be move to UPC.

Is anyone else finding the UPC - MNO story hard to believe?

watty · 07-05-2014 9:33pm

UPC has been dreaming of Quadplay since maybe 2007 or earlier? So the idea that UPC would be an MVNO isn't implausible

Tesco uses O2, but has own back end gear. In UK with success of Hudl (why none in Limerick but two shelves of useless DAB junk?) they are launching their own high end Android phone and a Hudl-2.

They presumably thus have some interest in what is happening (or not) to O2. If I was Tesco or UPC I'd not be happy about Three. They have shown ability to sell Data Contracts and PAYG, by selling at a loss, poor ability to sell voice and made a mess out of outsourcing their engineering. They do ZERO engineering. Virtually every 3G repeater that they have installed is inappropriate and they have had the most visibly misleading marketing of Mobile Data of all Mobile operators in Ireland.

So what skill and expertise are Three bringing. All they appear to have is the Hong Kong "parents" willingness to spend money. They know nothing about running anything other than retail.

The Cush · 07-05-2014 9:58pm

clohamon wrote: »

Is anyone else finding the UPC - MNO story hard to believe?

Initially yes, but looking at Liberty Global's Q1 results announced yesterday they have quiet a lot of mobile subscribers already.

They recently launched mobile services via their UPC Cablecom network in Switzerland as a "full-MVNO" on the Orange mobile network. All together Liberty Global has over 4m mobile subscribers spread across Europe and Chile at the end of March.

This from their Q1 2014 results press release

We’re also making significant progress on the wireless front, with the recent launch of mobile services in Switzerland, the introduction of new and improved quad-play offers in the U.K and the expansion of our WiFi-spots in Belgium and the Netherlands to over 1.5 million locations. Building on this momentum, we expect to continue to launch MVNO and WiFi services in more markets throughout our footprint, which will further enhance the customer experience.”

http://www.libertyglobal.com/pdf/press-release/LG-Earnings-Release-Q1-14-FINAL.pdf

12 months after the EC make their decision on the merger, Jul 2015, Comreg's Time-Slice 2 mobile spectrum allocations kicks-in, this could be a natural point where the EC requires spectrum to be sold off to a new operator like UPC.

clohamon · 07-05-2014 10:11pm

watty wrote: »

UPC has been dreaming of Quadplay since maybe 2007 or earlier? So the idea that UPC would be an MVNO isn't implausible

MVNO I can understand, but MNO looks mad. They have no quad-play bundle to sell outside their urban areas.

Its not clear which spectrum they would be getting or whether the original coverage obligations would transfer with the purchased spectrum. That's 85% of population for the 3g licence and 70% of population for the liberalised-use licence.

bk · 08-05-2014 3:49am

I would be surprised if UPC became a full MNO, but they might become something a bit more then a traditional MVNO.

AFAIK At the moment a traditional MVNO like Tesco Mobile, rents capacity on o2's spectrum, towers and fibre/P2P backhaul network, but has their own gear from the network center on.

UPC has their own large and very deep fibre network in urban areas, so they could run the fibre to the Three towers, thus eliminating that cost and just renting the spectrum and tower access.

Think of it more as a LLU operator rather then a bit-stream operator.

Also UPC seem to have big plans for their wifree service, that could help take a lot of the data load off the 3/4G networks and onto their cable network instead. Chine Mobile were able to move 80% of their data from 3/4G to wifi by doing the same.

bealtine · 08-05-2014 11:30pm

Well their "no comment" is more telling than it looks really I wonder if they could just do "urban areas" much like their cable system and not bother with rural areas or just have them as an "after thought"

bealtine · 16-05-2014 4:17pm

EU regulators set to clear Hutchison, O2 Ireland deal

http://www.rte.ie/news/business/2014/0516/617858-o2-ireland-deal/

The Cush · 16-05-2014 10:00pm

bealtine wrote: »

EU regulators set to clear Hutchison, O2 Ireland deal

http://www.rte.ie/news/business/2014/0516/617858-o2-ireland-deal/

This from Reuters - http://www.reuters.com/article/2014/05/16/us-hutchison-wham-telefonica-eu-idUSBREA4F0F820140516

The Cush · 24-05-2014 8:00am

Hutchison Whampoa will win European Union approval to take over Telefonica’s O2 Ireland unit as soon as May 28 after a key EU panel backed the deal, according to two people familiar with transaction.

Officials from the EU’s national competition authorities met this week and gave their support to the European Commission’s plans to approve the deal, said the people who couldn’t be identified because the EU approval process isn’t public. National regulators’ decision, which isn’t binding, paves the way for the European Commission to grant final approval at its next meeting on Wednesday, the people said.

Liberty Global Plc’s UPC unit is poised to provide mobile phone services in Ireland, taking up Hutchison’s offer of network access that sought to allay EU regulatory concerns, two people said earlier this month. Hutchison’s concessions are designed to overcoming EU objections to the combination of two of Ireland’s four mobile operators.

http://www.bloomberg.com/news/2014-05-23/hutchison-said-to-win-eu-approval-for-o2-irish-deal-next-week.html

http://www.independent.ie/business/media/eu-poised-to-give-three-green-light-for-o2-takeover-30300034.html
http://www.irishtimes.com/business/sectors/technology/hutchison-s-acquisition-of-o2-may-be-given-go-ahead-next-week-1.1806507
http://www.irishexaminer.com/business/hutchison-set-for-o2-ireland-takeover-269748.html

An Irish Times article says the mobile deal concessions are a face-saving ploy, UPC will buy 50,000 customer accounts and have the option in future to become a full mobile network operator but this may never happen

What is already apparent is that some of the concessions made by Hutchison since it lodged its original set of remedies are just meaningless items of window dressing, and are designed solely for the commission to save face.

The commission’s main concern all along about the takeover was that it cut the number of mobile network operators in the State from four to three. This seemingly illogical stance totally ignored the fact that Ireland’s tiny mobile market has only ever supported three network operators. 3 Ireland has never made a red cent – the market never supported the number four player. The deep pockets of its Hong Kong parent Hutchison did that.

Hutchison originally offered to open up 3’s infrastructure to an MVNO network-piggybacking arrangement for cable operator UPC. This wasn’t enough for the commission, because an MVNO is not a network operator.

So, to mollify the commission, an option for a silly “glide path” to potentially turn the UPC MVNO into a full network operator – by selling it spectrum – was tacked on to the plan.

To make it sound plausible, it was agreed UPC would buy a ready-made customer base of about 50,000 accounts from O2.

This concession was meaningless. UPC does not want to be a mobile network operator. The “glide path” option will never be taken up by UPC, and everyone knows it. The cable operator only wants some form of mobile offering so it can bundle it with its TV and broadband services.

But it allows the commission to point to the possibility the number of Irish network operators could potentially grow from three to four again in the future. An Irish solution to a European problem.

http://www.irishtimes.com/business/sectors/technology/mobile-deal-concessions-a-face-saving-ploy-1.1807237

clohamon · 24-05-2014 9:14am

Pretty much spot-on by the Irish Times, except...

To make it sound plausible, it was agreed UPC would buy a ready-made customer base of about 50,000 accounts from O2.

I can't see how they can just dump 50,000 customers without their permission.

Still no news on the Vodafone/Three network agreement.
Still no news on whether the NBS masts must be retained.

SpaceTime · 25-05-2014 2:10am

Easy: Three Ireland's existing customer base (perhaps bill pay only) gets sold to UPC and Hutichson concerns itself with the more lucrative O2 customer base which is more business and high spend oriented.

As Three and O2's customer bases are totally separate, there wouldn't be a major issue doing this.

Three to buy O2 Ireland for €780 million

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