Hutchison UK mobile deal to face EU veto within weeks

Bloomberg

CK Hutchison Holdings Ltd.’s $14.5 billion bid for Telefonica SA’s U.K. mobile-phone business has failed to win over European Union antitrust regulators who are expected within weeks to formally block the deal creating Britain’s biggest operator.
The EC wasn’t convinced that Hutchison’s offers to sell space on its network to so-called virtual operators would create enough rivalry to prevent potential price increases, according to two people familiar with the negotiations. The EU, backed by U.K. antitrust and telecom agencies, is holding out for Hutchison’s Three and Telefonica’s O2 to offer to sell part of their network infrastructure to a new rival, the people said.
Barring a last-minute breakthrough, Hutchison is focusing on whether it could win approval for a bid to merge its Italian operations with VimpelCom Ltd., another deal that would reduce the number of mobile-phone operators from four to three. The EU opened an in-depth probe into that transaction last month. Hong Kong-based Hutchison is already preparing to challenge any EU move to block the U.K. deal in court, a process that can take years, the Sunday Telegraph
reported.
An EU ban may halt a wave of consolidation in the European telecommunications industry after regulators cleared mergers in Germany, Austria and Ireland. It would be the first merger to be blocked since MargretheVestager became competition commissioner in 2014, though opposition to a Danish mobile deal forced the companies to ditch the proposal last year.
While regulators favor “structural remedies” — such as a sale of part of the business — they don’t have a set template for what mobile-phone businesses should do to allay competition concerns, Vestager told reporters on Monday. Deals in Italy, the U.K. and Denmark all face different situations, she said.
“We will continue to do merger control with eyes on the consumer. Will there post-merger be a competitive situation?” Vestager said.