CK Hutchison has made a last-ditch attempt to win Brussels regulators sceptical of its £10.5bn acquisition of O2 in the UK with a third set of concessions to address concerns over the loss of competition.
Hutchison is locked in talks with Brussels regulators to win approval for the takeover, which will see it merge the company with its Three network to create the country’s largest mobile group.
The Hong Kong-based group on Thursday will submit its final set of proposed remedies.
It will include potential deals with Sky to take about a fifth of the network’s capacity — allowing the media company to offer customers the ability to make calls and use 4G services — and Virgin Media to have about 10 per cent of the combined network.
Hutchison has also proposed selling the half share in Tesco Mobile owned by O2 as part of the deal and also give the retailer capacity on the network.
The company has also pledged to maintain and invest in the networks run between O2 and Vodafone, and Three and EE.
Hutchison hopes to convince the commission that the involvement of some of the largest media and retail groups in the UK will restore competition to the UK mobile market.
However, it is not certain that this set of remedies would sway the commission given that it would not address all Brussels’ concerns about the loss of competition at a network level.
Many telecoms executives and analysts are sceptical about the deal’s prospects, with antitrust officials keen to replace O2 with another mobile group by forcing Hutchison to split off some of its infrastructure and spectrum.
Those familiar with the process said officials would rather see a fourth network created, although it is not clear on what terms. The commission has also asked companies for their opinions on the set of remedies proposed by Hutchison.
The group has offered to open the larger UK network to rivals on 10-year contracts, which would allow these rivals to offer improved mobile services on a longer-term basis even if they do not own the infrastructure. Other interested groups include TalkTalk and Iliad, the French operator.
Hutchison has offered a deal to Dixons Carphone to address its concerns about the loss of a potential retail partner. Hutchison has also pledged to invest £5bn in its mobile infrastructure — both to extend and improve services — and freeze prices for five years.
The commission has extended its deadline for the deal until May 19 while the concessions offered by Hutchison are being considered.
Analysts fear that the collapse of merger talks between Orange and Bouygues in France in recent days could have a knock-on effect on similar attempts to consolidate the UK and Italian mobile markets.
Hutchison, Virgin and Sky declined to comment.
Tesco said: “Tesco Mobile, which is a joint-venture with O2, is a key part of the overall Tesco portfolio. We remain actively involved in the proposed merger process to ensure we deliver the best possible service for Tesco Mobile customers, and protect shareholder value.”
Additional reporting by Mark Vandevelde