Vodafone may take legal challenge against Three’s acquisition of O2 Ireland

29 May 2014

Vodafone said it is examining its options under both EU and Irish law as to whether it will challenge Hutchison Whampoa-owned Three’s €850m acquisition of O2 Ireland to ensure all operators receive an efficient allocation of spectrum.

Yesterday the European Commission gave Three the green light to acquire O2 Ireland, citing a number of conditions.

The move will make Three the second largest operator on the island of Ireland with a combined revenue base of €736m.

Under the conditions Three has committed to provide network capacity and mobile virtual network operator (MVNO) services to two MVNOs in order to facilitate new MVNO entry into Ireland with the option to acquire spectrum that may be taken up by one or the other to become a network operator.

However, yesterday ComReg expressed its belief that the European Commission’s concerns over competition won’t be addressed and suggested there will be negative consequences for Irish consumers.

ComReg said it will stick to its strategy of managing Ireland’s radio spectrum as well as identifying alternative spectrum to facilitate greater competition.

Noting ComReg’s concerns, Vodafone this afternoon said that the remedies proposed by the European Commission could be a step in the wrong direction, favouring operators that don’t invest in infrastructure over those that do.

“Moreover, the Commission does so at a time when investors are looking for positive returns on infrastructure investment and as Vodafone is embarking on the largest and fastest investment programme in the company’s history, totalling €23bn over the next 24 months.

“On the basis of the information currently in the public domain, Vodafone also has significant concerns that the proposed remedies will distort healthy competition rather than preserve it, and will act as a barrier to future investment in next generation communications in Ireland.”

Does Ireland need two new MVNOs?

On the subject of creating two mobile virtual network operators (MVNOs) Vodafone said that at some point in the future there is option of them becoming a single mobile operator in their own right with their own reserved spectrum.

It questioned the rationale for the creation of a new mobile operator if this reverses consolidation and said that such an operator would have little incentive to take on the burden of spectrum and network investment.

“Vodafone therefore seriously doubts that this network option will ever be taken up. As a result, Hutchison will likely retain all the current spectrum holdings of Hutchison and O2 in Ireland, which is an inefficient and ineffective use of spectrum, will distort competition and will discourage investment in mobile networks in Ireland.

“Vodafone is considering its options under both EU and Irish law and urges ComReg to use its powers to ensure that all operators receive an efficient allocation of spectrum that will sustain dynamic competition in Ireland,” Vodafone said.

Wireless spectrum image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years