Vodafone reacts angrily to EU’s decision to approve 3 Ireland’s O2 takeover

30 May 2014

The Irish Independent reports that an angry ‘war of words’ has broken out between Vodafone Ireland and rival Hutchison 3G Ireland (trading as 3 Ireland), following the European Commission’s (EC’s) decision to rubber stamp the latter’s takeover of fellow Irish cellco O2 Ireland in a EUR780 million (USD1.06 billion) deal. In a swift and bitter reaction to the EC decision, Vodafone has said it is considering legal action both in the Republic and in Europe, accusing the Commission of allowing 3 Ireland to side-step investment to the detriment of end users. ‘The Commission’s decision points in the wrong direction by favouring operators who do not invest in infrastructure over those that do,’ a spokesman for Vodafone Ireland is reported as saying, adding that in its opinion 3 Ireland’s pledge to help set up a new ‘full’ mobile network operator (MNO) – a condition included in the deal to safeguard competition – is destined to failure. ‘Given the investment required … Vodafone seriously doubts that this network option will ever be taken up,’ said the spokesman, adding: ‘As a result, Hutchison will likely retain all the current spectrum holdings of Hutchison and O2 in Ireland, which is an inefficient and ineffective use of spectrum, will distort competition and will discourage investment in mobile networks in Ireland.’

Hitting back, 3 Ireland chief executive officer Robert Finnegan has accused his competitor of hypocrisy, noting that its concerns over spectrum disparities between MNOs ‘were never a concern for Vodafone when it held over twice 3’s spectrum capacity over the past decade’. The CEO went on to say that he was not surprised at Vodafone’s reaction given that it fears the threat of increased competition in the shape of an enlarged number two player and the setting up of one or two mobile virtual network operators (MVNOs) under the agreed concession to pass the deal.

Further, the legal threats emerge in the wake of an announcement by Ireland’s telecoms watchdog ComReg which has also expressed concerns over the EC’s decision to allow the takeover to take place. The regulator has warned that it fears a ‘significant negative consequences for Irish consumer welfare’, as a result of the deal, adding that in its view it ‘appears inadequate and ineffective to address the serious competition concerns and consumer harm identified by the European Commission, for example higher prices’.

Ireland, Vodafone Ireland, O2 Ireland, Hutchison 3G Ireland (3 Ireland),

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