European regulators to throw spanner in Three's O2 merger

Mobile network Three will this week be forced to make major concessions as part of its £10.3bn acquisition of rival O2 from Spain's Telefonica.

A “statement of objections” from the European Commission is expected to attach prohibitive concessions to the proposed purchase by Three’s Hong Kong-based owner, Hutchison Whampoa, before approval is granted.

Despite BT's acquisition of EE, Britain's largest mobile network, having been approved by the UK's Competition and Markets Authority last week, the EC may force Three, which controls roughly 11% of the UK mobile market, to sell off network capacity to rival firms before it can complete a deal that would give it a near-40% market share.

The EC is thought to object to the deal as the Three-O2 merger will reduce the number of mobile network operators from four to three, while BT did not run its own mobile network before the EE purchase.

Hutchinson has almost three months to persuade the commission's competition chief Margrethe Vestager that reducing the number of network operators will not disadvantage UK consumers.

However, already this year she has stated it was “difficult to find evidence” that network consolidation “brings more investment” to the industry. “What we see is that the shareholders get the benefits, not the clients,” she said.