Three-O2 deal: Virgin Media urges Europe to allow £10.5bn merger as Vodafone blasts Hutchison's price freeze pledge

 
Clara Guibourg
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Telco rivals are locking horns over the effects of the proposed merger (Source: Getty)

Virgin Media has come out in support of the proposed £10.5bn deal between Three and O2, even as rival Vodafone blasts it as “re-monopolisation” of the telco market.

Virgin is calling on the EU’s competition watchdog to approve the deal, following pledges made yesterday to open up the combined network to other players.

A deal between Three and O2 would create the UK’s largest mobile operator, controlling some 40 per cent of the market.

It would also bring the number of operators down from four to three, something which has sparked competition fears, with both UK and EU regulators overseeing the deal. Yesterday the European Commission sent an extensive statement of objections to Three’s parent company, Hong Kong-based Hutchison.

In response to concerns, Hutchison pledged not only a five-year price freeze for Three and O2 customers, but also to open its network to competitors. The deal has won support from several rivals, with both Sky and Virgin backing it:

“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,” said Tom Mockridge, chief executive of Virgin Media, to the Financial Times.

Not all competition was appeased, however. Vodafone has lashed out against the pledge, with chief executive Vittorio Colao describing it as “interesting”.

“I’m not sure what a ‘price freeze’ means, because as far as investment goes I don’t know how you can commit to this,” said Colao, who has also warned of a re-monopolisation of the European telco market.

This is the latest act of a drawn-out drama between UK telco heavyweights clashing over the increasing consolidation of the market.

The recently finalised deal between BT and EE was blasted by Sky, Vodafone and TalkTalk, even as rival Virgin has thrown its support behind it.

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