Hutchison Whampoa, the Hong Kong conglomerate that owns Three across Europe, has confirmed it is in exclusive negotiations to acquire O2 in the UK from Telefónica for €13.5bn (stg£10.2bn).
Dublin: 25.01.2015 10.13AM
Mobile operators Vodafone and 3 are in the final stages of negotiations and are due to sign a deal where both companies will roll out advanced next-generation Long Term Evolution (LTE) infrastructure across Ireland as part of a shared investment.
Sources say that fundamentally the objective is to cut costs when rolling out this infrastructure.
Operators in Ireland are anxiously awaiting telecoms regulator ComReg’s decision to kickstart the wireless spectrum auctions in order to ensure investor certainty for the new LTE networks that could boost wireless broadband speeds to between 40Mbps and 80Mbps in certain locations.
The nature of the deal between Vodafone and Hutchison Whampoa-owned 3 will be primarily site sharing and infrastructure sharing.
The two operators, whose networks in Ireland have been built by BT, will share infrastructure but compete as aggressively as ever at a retail level.
An informed source said that what is key is the ability to build overlapping networks to ensure consistent coverage countrywide, and by operators pooling resources the rollout of advanced 4G networks becomes more practical.
The looming deal between Vodafone and 3 echoes a recent deal between Vodafone and Telefónica (owner of O2) to build a nationwide 4G network in the UK that will cut the costs of deployment by 25pc.
A similar network sharing deal was struck between O2 and Eircom last year.
However, the source also pointed to dissension in the mobile industry at the slow pace with which ComReg is going about launching the crucial spectrum auctions.
Local management are struggling to get signoff on investment decisions but the slow progress means they are fighting against other geographies to prioritise investment.
Another issue that will fundamentally harm Ireland from a regulatory and investment perspective is the failure so far to pave the way for perpetual or indefinite licences for operators.
In the US and UK and certain European countries, perpetual licences for services and geographic coverage provide investor certainty and are a more attractive option for global management.
Otherwise licences that require hundreds of millions of investment to fulfil yet only guarantee coverage rights for five, eight or 10 years are no longer seen as viable in the eyes of senior managers at global operator level, our source explained.
Wireless tower image via Shutterstock