Three’s plan to buy O2 has been blocked by the EU

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Three's plan to buy O2 has been blocked by the EU

In early 2015 it was revealed that Three’s parent company Hutchison was planning to buy Telefonica’s O2 brand to make the UK’s largest mobile network – but now the deal has been blocked.

European Commissioner for Competition Margrethe Vestager revealed the outcome onTwitter before making an official announcement confirming the deal had been blocked.

She said the decision was reached “to serve UK consumers – affordable prices and innovation”.

It means UK will continue to have four major networks in the form of Vodafone, Three, O2 and EE. That means more competition and hopefully lower prices than if Three and O2 were to merge.

It’s all over

Hong Kong-based Hutchison Whampoa is sure to be disappointed about the deal being blocked and it’s not certain whether the company will appeal the decision.

Kester Mann, Principal Analyst, Operators at CCS Insight said: “The collapse of the deal leaves both Three and O2 in a precarious position with uncertain futures in the UK. It also casts serious doubt over the future structure of a European telecoms sector that had banked on the tie-up paving the way to further consolidation.

“The most likely eventual outcome for O2 is sale to private equity, however Liberty Global, which owns Virgin Media, could consider a bid. Sale or partial-sale to a deep-pocketed operator from outside the UK such as Softbank or America Movil is also plausible.

“For the time being however, O2’s parent Telefonica may elect to hold on to an asset that in recent years has impressively out-performed rivals despite its uncertain future.”

Techradar has contacted both Three and O2 and will update this story when we know more about both networks’ plans for what happens next.

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