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Parent company CK Hutchison reportedly makes final offer to European Commission with regard to O2 deal.
3UK parent CK Hutchison has struck billions of pounds’ worth of mobile network capacity deals with Sky and Virgin Media in a final effort to win European Commission approval for its acquisition of O2.
According to a Telegraph report late on Wednesday, Sky has agreed a £2 billion deal to take a 20% share of the capacity on the merged network. The contract will be valid for more than 10 years.
Sky already plans to enter the U.K. mobile market in 2016, striking an MVNO deal with Telefonica in January last year. However, sources cited in Wednesday’s report claim the new agreement with Hutchison – submitted to the Commission as part of a final set of concessions – will lower Sky’s costs.
Meanwhile, Virgin Media has struck a separate deal for 10% of the capacity on the merged network. According to the Telegraph, this agreement is not included with Hutch’s latest concessions, but it nonetheless won’t harm the company’s case for getting approval for its O2 purchase.
The report did not explicitly state exactly how much the Virgin Media deal is worth, only that Hutch’s two capacity deals together amount to £3 billion (€3.71 billion).
In addition, UK Broadband, which operates London-focused fixed wireless service Relish, is also in talks to acquire capacity on the merged 3UK/O2 network in order to launch nationwide mobile services.
The tie-up also raises questions about the future of Beacon, O2’s network-sharing deal with Vodafone. Sources in the Telegraph report claimed Hutchison has agreed to honour the agreement until the end of 2017.
Of course, all of these above agreements are conditional on the Commission giving 3UK the green light to actually acquire O2.
The £10.25 billion deal faces stiff opposition from U.K. telco watchdog Ofcom, which is concerned about the potential for price rises if the merger goes ahead.
The Commission has set a provisional deadline of 19 May for issuing a decision.
