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Mobile services

Eurobites: EU Vetoes O2/3 Combo

Also in today's EMEA regional roundup: Brussels studies Deutsche Telekom's vectoring plan; Nokia brings LTE-Advanced to Jeddah; Mobistar turns Orange.

  • It's official: O2 into 3 won't go. As widely predicted in recent weeks, European Union antitrust authorities have blocked Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY)'s proposed $14.9 billion acquisition of Telefónica UK Ltd. (O2), which would have created the UK's largest mobile operator by combining it with Hutchison's own Three UK unit. As Reuters reports, European Competition Commissioner Margrethe Vestager said that her team had "strong concerns" that the deal, if approved, would have meant less real choice for UK consumers, and that it would have slowed the development of network infrastructure in the country. Hutchison had offered concessions to the regulators, such as offering to sell space on its combined network to MVNOs, but this was clearly not enough for those sitting in judgement in Brussels.

    Fearing such an outcome, Telefónica has reportedly been considering alternative options for a sale of its UK business, including private equity players and US cable giant Liberty Global Inc. (Nasdaq: LBTY). Yesterday, as the Daily Telegraph reports, Liberty Global CEO Mike Fries responded to questions about the possibility of Liberty making a play for O2 by telling investors: "We look at all options in the marketplace and it would be strange if we didn’t evaluate that option." Commenting on the Commission's decision, Bengt Nordström, the CEO of analyst and consulting company Northstream, told Light Reading: "I think there will be a very negative reaction in the investment community and this will scare investors away from the sector in Europe for some time. This is very disappointing for 3 and we can assume Telefónica will try to find a different buyer -- most likely a private equity buyer -- but they will never get near the scale advantage of a combined 3 and O2." (See EC to Stop Hutchison Buying Telefónica UK – Report, Eurobites: Hutchison Rules Out Further Concessions on 3/O2 Deal, Eurobites: Merger of O2 & 3 Is a Bad Idea, UK Tells EC and Telefónica Eyes Alternative Buyers for UK Biz – Report.)

  • The European Commission has also been turning its attentions to Deutsche Telekom AG (NYSE: DT), and in particular the operator's plans to use vectoring technology to turbocharge its copper networks for high-speed broadband. As the Financial Times reports, the Commission plans to investigate whether the German telecom regulator, Bundesnetzagentur (BNetzA) , had done the right thing by allowed DT to upgrade its network in this way, conjecturing that the plan was likely to have a "considerably restricting effect on alternative operators." (See DT Looks to XG.FAST as Ultra-Fast Option and DT's $1.1B Vectoring Plans Thrown Into Doubt After New Ruling.)

  • Zain KSA (Zain Saudi Arabia) , with the help of Nokia Corp. (NYSE: NOK), has put LTE-Advanced to work in business and residential districts of Jeddah, the kingdom's second-largest city. According to Nokia, the three-component carrier aggregation technology enables Zain to offer speeds of up to 187.5 Mbit/s across its network.

  • UK fiber network operator CityFibre has announced new ISP partners for its metro networks in the cities of Milton Keynes and Northampton, which it took under its wing as part of its acquisition of KCOM Group plc assets in January. The contracts, with a combined value of £7 million ($10.1 million), are with DBfB, a Northampton-based enterprise connectivity provider, and Exa Networks, a Bradford-based outfit that caters to both the education and business sectors. (See CityFibre Takes On BT With $136M KCOM Acquisition.)

  • Interoute Communications Ltd. has supplied Sofia Connect, a wholesale carrier based in Bulgaria, with 2x100G services connecting Sofia to Frankfurt through major network hubs in Budapest, Bratislava, Vienna, Prague and Munich.

  • Belgium's Mobistar SA , which has just over 3 million mobile customers, has been rebranded to Orange. The move means that all Orange (NYSE: FTE)'s subsidiaries in Europe now carry the Orange branding.

  • Yahsat, the UAE-based satellite operator, has signed a memorandum of understanding with Tele10 Group, a regional ISP, to discuss a joint project to improve satellite-based connectivity in Rwanda, Burundi and Democratic Republic of the Congo.

    — Paul Rainford, Assistant Editor, Europe, Light Reading

  • [email protected] 5/12/2016 | 5:13:07 AM
    No major surprise on 02 + 3 but will they try again? I'm not sure it's worth the owners of O2 UK and 3 UK trying again to get t hose businesses merged -- the concessions offered were many but it still wasn't enough.

    I guess the question now is -- what next for these two operators in a market competing against a BT-backed EE and Vodafone? What are their next moves?
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