Originally Posted by japaul:
“I don't think we're at that stage yet. What we might see next week is the Commission spell out more clearly what their specific concerns are. This is known as a 'Statement of Objections.' It will then be for Hutch to see if they can come up with suitable remedies which sufficiently allay the concerns.
Whilst there's no doubt the whole deal has become a lot tougher with the new Commissioner especially since the 4 to 3 deal in Denmark was blocked, I think, on balance it probably will go ahead in some form.
There can't be any specific requirement to have 4 networks so you can't just look at Denmark. Each one has to be treated on its own merits. The biggest justification for the reduction in competition is investment. This has been a hard sell lately. However, Hutch have a far more convincing argument as given their size, they can argue that they can't compete effectively when the networks need large levels of investment as they do for the next few years. An ineffective Three is no longer a credible fourth player so we would effectively get to three networks by that route. This is totally different to Denmark where nobody thought the two players couldn't compete alone (they had a lot of sharing arrangements anyway so the investment story was very weak).
There's also the murkier world of tax. Basically a huge amount of value comes about from Three+O2 that doesn't exist in any other combination as Three have huge historic tax losses that would take them forever to use alone and O2 are the only serious tax payer (EE has been loss making until last year and Vodafone is well, Vodafone when it comes to tax). This means there's quite a lot of scope for Hutch to concede a lot and for the deal to still be worth it. Again totally different to Denmark. So we might end up with some kind of quasi fourth network being created (which would be more than an MVNO) to get it through.
It's hard to judge though as nobody knows quite how strong Margarethe Vestager's feelings on the subject are. The only certain thing is if anyone says it's either definitely going ahead or it will definitely be blocked then you can be sure they don't know what they are talking about.”
I think that's a very fair post, nobody knows for sure yet, but I think the feeling is that it will get approval subject to spectrum release and MVNO creation or similar.
I believe Margerethe is Danish and that when the Danish merger came up there were some thoughts that she would be strict there because of her career in politics and wanting to be seen to be tough. However we should remember that there are many European countries including large ones like Germany that have 3 operators, also that the Danish merger wasn't refused, the operators pulled out because they didn't want to agree to lose so much spectrum.
As you point out, the question over the long-term viability of Three on it's own is a strong one too, and it is clear that Three are much more willing than the Danish operators to make concessions, as they are buying not merging and it's the network owner of a small network buying a bigger one to ensure a longer term future in the UK, something which the parent company sold assets in HK specifically to be able to do. More spectrum will be available in the future and some 2100Mhz can be re-purposed for 4G on both networks if needed in the future.
All reasons why I think it it'll get the go-ahead with conditions, that seems to be what some articles are saying recently, also that a statement is due too, which I expect will be next week now.