Merger of Two Irish Mobile Networks Gets European Approval
Published on: 28th May 2014
The planned merger of two of Ireland's mobile networks has been approved by the European Commission, but subject to conditions.
Hutchison 3G had to make the concessions to secure permission to buy Telefonica Ireland to settle the Commission's concerns about a reduction in competition in the market.
Hutchison Whamoa is paying EUR850 million (USD1 billion) in cash upfront, with future payments of EUR70 million based on performance.
Commission Vice President in charge of competition policy Joaquín Almunia commented: "In a context of increased data consumption on their mobile devices, European consumers should continue to benefit from improved services at attractive prices. To achieve this, it is essential that healthy competition is preserved in mobile telecoms markets. The commitments offered by Hutchison 3G ensure that Irish consumers will continue to enjoy these benefits".
Ireland is a relatively small telecoms market, with around 4.6 million inhabitants and 5.5 million mobile telecoms subscriptions. A relatively high proportion of inhabitants live in rural areas, raising challenges for the roll out of mobile telecoms networks. All mobile network operators in Ireland already share networks to reduce the cost of their roll-out.
In order to overcome the concerns about competition reduction, H3G has offered to ensure the short-term entry of two MVNOs, and will sell up to 30% of its network capacity to the two new entrants.
The capacity is measured in terms of bandwidth and the MVNO entrants will obtain a dedicated "pipe" from the merged entity's network for voice and data traffic. This model is more effective than the typical pay-as-you-go model that MVNOs currently use in Europe and under which they pay for network access according to the actual usage of their subscribers.
The decision leaves open the possibility for them to become a full mobile network operator at a later stage. To facilitate this, H3G committed to divest five blocks of spectrum in the 900 MHz, 1800 MHz and 2100 MHz bands. The spectrum will be available for ten years, starting from 1 January 2016.
H3G also agreed to ensure that it continues to support the network sharing agreement it has with the smaller mobile network owned by Eircom, and will also improve the commercial terms being offered.