Three to chop off £3bn of its network in bid to woo EU over O2 merger

Please, miss, is that competitive enough?

Three UK is making a last-ditch attempt to win EU approval of its £10.25bn O2 merger with a number of sweeteners, including £3bn in network deals with competitors, according to reports.

According to The Telegraph, Three's owner, CK Hutchison, has signed deals with Virgin and Sky that will guarantee space on its expanded mobile network if the controversial deal gets the go-ahead.

Three hopes this will reassure regulators that the merger will not result in less market competition.

But that may not be enough to win over the EU's competition chief, Margrethe Vestager, who has indicated a fourth mobile operator would need to be created for the deal to go through.

Brussels and Ofcom have come out against the outcome of having one less operator in the market, arguing that will push up prices for consumers. However, analysts have said such a deal will be crucial to network investment.

In February Ofcom head Sharon White said the regulator is concerned that Three will become the biggest mobile operator by acquiring its rival, O2. "The combined group would control more than four in 10 mobile connections," she said.

Hutchison responded that for five years it would not hike up bills for consumers and would also plough £5bn of investment into in the UK over that period.

Sky will take a 20 per cent share of the network in a deal worth £20bn if the takeover goes through, sources told The Telegraph. Virgin Media has agreed a 10 per cent share of the network, they said. Both companies have previously gone on record as being in favour of the deal.

Hutchison has also committed to selling O2’s 50 per cent stake in Tesco Mobile to the supermarket, reported the newspaper.

EU officials will decide if the acquisition of O2 may go ahead next month.

Hutchison declined to comment. ®

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