Hutchison in make-or-break decision as EU veto on O2 deal looms
By Foo Yun Chee
AMSTERDAM - CK Hutchison Holdings <0001.HK> faces a make-or-break moment as it ponders whether to ramp up concessions or face an EU regulatory veto over its 10.3-billion-pound bid to become Britain's biggest mobile operator.
The deal is an important step to consolidation in the telecoms industry, which was put on hold after European Competition Commissioner Margrethe Vestager's tough demands scuppered a plan by Teliasonera and Telenor to merge their Danish subsidiaries in September last year.
Hutchison earlier this month struck network-sharing deals with Sky , Virgin Media, Tesco and UK Broadband to take up over 40 percent of its combined network capacity to address EU concerns that the deal to acquire Telefonica's O2 may reduce competition.
The European Commission is yet to be convinced, preferring instead that Hutchison create a fourth network operator rather than reinforce small rivals which piggyback on others' networks, people with knowledge of the matter said on Monday.
Hutchison however has said it found no taker for either O2 or its own UK mobile subsidiary Three, and that such a move would undermine the economic rationale of the deal.
While the official deadline for concessions has already expired, Hutchison may still be able to sweeten its offer although at this late stage, it would be impossible to come up with any major changes, the people said.
The EU antitrust enforcer is likely to decide in the coming weeks whether to block the deal, with a formal decision expected by May 19. A veto could dampen operators' merger appetite unless they are willing to meet stringent regulatory demands.
Commission spokesman Ricardo Cardoso and Hutchison declined to comment.
Hutchison, controlled by Asia's richest man, Li Ka-shing, has already said it is prepared to challenge an EU veto in court, seeking more legal clarity which would allow the company to expand its telecoms footprint in Europe.
(Reporting by Foo Yun Chee, editing by Louise Heavens)
