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Hutchison 3G Offers Concessions to Secure Takeover Approval of O2 Ireland

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Hutchison 3G Ireland has reportedly offered to sell some of its customer base and its radio spectrum in order to secure approval for its merger with a rival Irish mobile network.

Telefonica O2 is looking to sell its Irish subsidiary to Hutchison Whampoa's local division, Three Ireland, but the deal is being held up by competition concerns from European regulators.

Hutchison Whamoa is paying EUR850 million (USD1 billion) in cash upfront, with future payments of EUR70 million based on performance -- and subject to regulatory clearance.

Three has reportedly submitted a number of remedies to the European Commission to overcome the competition concerns, which have now been passed to the rival networks for their feedback.

The country currently has four mobile networks, and the merger of O2/Three would still leave the enlarged company in second place behind Vodafone. However, it would also create a significant imbalance in the market, with two companies holding nearly 40% market shares each, and small Meteor (owned by Eircom) holding less than 20 percent.

Citing unnamed sources, both the Irish Times and the Independent reported that the offers include setting up a new MVNO, which would later be able to buy some of the merged company's radio spectrum and customer base -- to become a conventional stand-alone network.

That would preserve the level of competition in the market, but only if the MVNO were a commercial success in its own right.

Hutchison has however repeatedly maintained that competition in Ireland will be better served by three credible operators with sufficient scale to compete for a total market of 4.6 million, than by the current market structure.

Whether the offer of supporting the creation of a fourth new network would fit in with its intents remains to be seen.

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