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Reaction: O2 and Three block will benefit industry

Alex Yau
May 17, 2016

The reaction follows the European Commission’s decision to block CK Hutchison’s takeover of O2 last week (May 11). 

Dealers and analysts have hailed the European Commission’s (EC) decision to block CK Hutchison’s proposed takeover of O2 as a ‘positive’ step for the industry.

News of the deal’s collapse was made just as Mobile News was going to press, but dealers, distributors and analysts were quick out of the blocks to express their views – with many seeing it as a positive for all involved.

“Less choice always puts an in- crease on price,” O2 partner Global Mobile Communications director Stephen Westley told Mobile News. “There will be fewer options for consumers and it’s perhaps a godsend for retail workers who may have had their jobs put at risk.”

Four networks

Carphone Warehouse head of B2B Bob Sweetlove agreed, admitting the news wasn’t a shock.

“It isn’t really a surprise for anyone in the industry, as there has been a lot of noise around the deal, so we expected it.

“There could have been benefits if the combined entity had continued to invest more for a better service and for customers. If Telefónica isn’t primed to invest then it could have a negative impact, but the regulators are saying they want four networks.”

Period of unrest

ADSI MD Adrian Spreadborough claimed the block could create a period of uncertainty in the channel. He added: “I don’t think Three would have come in with any major changes anyway – why would anyone spend that much on a business channel just to destroy it? This could open up another period of uncertainty, which will be difficult for the channel, but at least we have a long-term contract, and that won’t change no matter whose hand is on the tiller.”

Analysts across the industry agree the decision has prevented any risk of damage to the UK mobile market. uSwitch head of regulation Richard Neudegg claimed innovation throughout the UK would have slowed. “If this merger had been given the green light, there would have been a real risk of stifling innovation, and the incentive for networks to undercut each other could have been severely diminished.”

However, NTT DATA UK client partner Alastair Masson disagreed claiming a successful merger would have kept larger players like BT in check. “A combined O2 and Three represented an opportunity to restore some balance to the market at a time when BT’s influence has never been stronger. We, as a sector, lost that opportunity today.”

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