Virgin Media CEO calls for Three-O2 mobile green light

Tom Mockridge

Virgin Media CEO Tom Mockridge has spoken out in favour of the EC giving a green light to mobile operator Three’s owner CK Hutchison taking over rival O2, owned by Telefónica.

“‎Any competition concerns can be addressed without blocking the proposed O2-Three transaction,” said Mockridge in a statement.

The EC is currently considering the deal, which is opposed by UK regulator Ofcom on competition grounds.

Virgin Media is one of the companies that could stand to benefit from any remedies the EC imposes to give a green light to the combination of Three and O2. These could involve the obligatory sale of assets, including network and spectrum assets, by the new combined mobile operator, which could enable the creation of more powerful competitor than current mobile virtual network operators can provide.

Virgin Media is well-placed to take advantage of any imposed remedies. The company is already one of the UK’s largest MVNOs by number of customers, providing mobile telephony service to around 1.8 million post-paid and 1.2 million pre-paid customers.

In his statement, Mockridge cited the example of Austria, where the EC approved Hutchison Whampoa’s acquisition of Orange’s local operation, reducing the number of mobile network operators from four to three, and Ireland, where Hutchison’s acquisition of Telefónica’s local operation created a similar result.

“The Commission has previously cleared mobile mergers which resulted in a reduction in the number of mobile operators from four to three, subject to wholesale remedies.  In two of these cases, Austria and Ireland, Virgin Media’s parent company Liberty Global provides vigorous competition and consumer choice as a result of taking EU remedies,” said Mockridge.

“The same can be true in the UK.  A combined O2-Three could have more to offer consumers and, crucially, more capacity for other providers who want to drive competition in their own right.   With the right remedies, this deal could stimulate not curb competition.”

This week the EC gave a green light to Virgin Media parent company Liberty Global’s Belgian operator, Telenet, to acquire BASE Company from KPN.

Earlier this week Ofcom CEO Sharon White came out in opposition to the Three-O2 merger in the Financial Times, arguing that it could result in increased prices to consumers.

The ultimate decision on the acquisition lies with EC commissioner Margrethe Vesthager, who has imposed stricter remedies of late when giving the green light for mobile mergers.

Last month it emerged that Xavier Niel, the proprietor of French upstart mobile and fixed-line operator Free had approached Ofcom to express an interest in entering the UK market if the Three-O2 deal went through and a decision was taken to create a new mobile network operator.