Exclusive: EU regulators set to open lengthy probe into Hutchison's UK deal - sources

Reuters News
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Posted: Sep 18, 2015 12:30 PM

BRUSSELS/LONDON (Reuters) - EU antitrust regulators are set to open a full-scale investigation into Hutchison Whampoa's bid for Telefonica's British mobile unit, a move likely to lead to the company offering significant concessions, three sources said on Friday.

Hutchison, owned by Asia's richest man, Li Ka-shing, sought EU approval for the deal more than a week ago, just as the European Commission signaled a tougher line on telecoms mergers after waving through three deals in the last two years.

The EU competition authority, which has set an Oct. 16 deadline for its preliminary review of the 10.3-billion-pound ($16.04 billion) mobile merger in Britain, is expected to follow that up with an extensive investigation because of the case's complexity, two people familiar with the matter said.

A full-scale or so-called phase two investigation lasts around five months.

Hutchison may have to sell parts of the combined entity's network capacity and spectrum to get the green light, the sources said.

One complication is the fact that Hutchison’s UK unit shares a 3G mobile network with number one player EE, while Telefonica shares some mobile towers with Vodafone.

That means it might be difficult to sell off parts of the networks to a new competitor so as to address regulatory concerns, analysts have said. Similar issues contributed to the failed Denmark deal proposed by TeliaSonera and Telenor because the operators already shared a single network there.

(Reporting by Foo Yun Chee in Brussels and Pamela Barbaglia in London; editing by Leila Abboud)