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Virgin gives blessing to O2/Three merger

Eyes up prospect of tasty 4G

Virgin Media has weighed in to give its blessing over the controversial £10.5bn proposed merger between Three and O2, hoping such a move would give it greater network access.

The intervention follows a pledge yesterday by Hong Kong-based CK Hutchison, which owns Three UK, that it would enable competitors in the UK to offer services "on a completely level playing field" if regulators give it the green light.

Earlier this week Ofcom head Sharon White wrote in the Financial Times that she is not keen on the deal believing it would push up prices for consumers. CK Hutchison responded that it would not hike up bills for consumers over five years and plough £5bn of investment into in the UK over that period.

Virgin Media chief exec Tom Mockridge said any competition concerns could be addressed without blocking the proposed O2-Three transaction.

He said: "A combined O2-Three could have more to offer consumers and, crucially, more capacity for other providers who want to drive competition in their own right. With the right remedies, this deal could stimulate, not curb, competition.”

Kester Mann, principal analyst of operators at CCS Insight, said both Sky and Virgin could benefit from the merger, if remedies were put in place to allow them further access to existing providers' networks.

"Virgin is still not offering 4G, which could be one of the reasons for its interest in the merger going ahead. Clearly it has had some challenges negotiating access to EE's 4G network. So there is currently a misalignment between its fast broadband speeds and 3G service."

The European Competition Commissioner Margrethe Vestager has sent out private "statement of objections" to the two firms.

Vestager has already indicated she is against the deal, also believing fewer mobile operators would have a negative impact on consumers.

The Commission has until April 22 to decide if the deal should go ahead. ®

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