EU slams the door Telefonica to veto the sale of its subsidiary O2 Hutchison – Investing.com Spain

By Foo Yun Chee

BRUSSELS (Reuters) – The antitrust regulators of the European Union on Wednesday blocked the plan CK Hutchison Holdings (LON to become the largest operator of the telecommunications network . mobile UK in a decision that also casts doubt on whether there will be a green light to another operation in Italy

the European Commission said it would authorize the sale to Hutchison O2, the British subsidiary of Telefonica (MC: ) for 10,300 million pounds, would have caused higher prices of mobile telephony in the UK, since it would have left only two rivals in the sector, the newly acquired EE BT Group (LON and Vodafone (LON:).

Hutchison is also awaiting a decision on the merger of 21,800 million dollars of its Italian subsidiary 3 Italia with Wind, Vimpelcom (NASDAQ :), to create a stronger rival for Telecom Italia (MI and Vodafone.

Hutchison was disappointed by the decision of the Commission on its offer of O2 and said it would consider its options, including a possible legal recourse.

He also said that now would focus on working with the Commission to ensure the authorization of the merger of Wind and 3 Italy.

the failure of the British operation is also a blow for Telefonica, which wants to reduce its debt, although it is not a surprise after sources close to the matter told Reuters last month and was expected to be blocked.

in September there was already a precedent when TeliaSonera (ST and Telenor (LON resigned to a mobile merger in Denmark after European Competition Commissioner Margrethe Vestager, he said he believed the national market should have at least four network operators competing.

Telefonica recently said he had a lot of options for O2 UK if the agreement with Hutchison not passed on, including finding another buyer for all or part of the company, an IPO, or invest more in the subsidiary.

Minutes after the Commission decision became public, Telefonica was quick to say that the announcement did not change its medium-term projections and maintained its objectives financial leverage ratio and dividend policy.

the group of Liberty Global (NASDAQ Tuesday said Tuesday it would consider buying O2 if Brussels blocked the deal with Hutchison, but said he also valued the flexibility it had in its current strategy of being a virtual mobile operator.

the Commission said Wednesday that the union of Hutchison Three UK and O2 UK would have created a market leader with a market share of more than 40 percent, reducing choice options, hindering the development of infrastructure and weakening the bargaining power of smaller “virtual” operators wishing to gain access to networks.

Vestager said the document size EU decision highlighted the complexity of the case.

“This decision weighs 2.56 kilos. Is a heavy decision, myself I have heavy, “he told a news conference.

JUG OF WATER CONSOLIDATION SECTOR

The Commission said the proposal Hutchison to boost rivals Virgin Media and Tesco (LON Mobile offering access the merged network was not enough, and that the company was not willing to create a room network operator.

the regulator rejected arguments industry that mergers were necessary to make new investments in the networks of mobile broadband, saying instead that effective competition was the main driver.

the decision will discourage other similar operations, making companies consider instead more horizontal mergers in its attempt to offer packages Internet services, television and broadband telephony fixed and mobile, said Adrien Giraud, a partner at Willkie Farr & amp; Gallagher.

In January, BT completed its acquisition 12.500 million pounds of EE, the largest mobile operator in the UK, opening the way for the former state monopoly create a single integrated network of telecommunications services and television that competitors are trying to imitate.

“Although the Commission is likely to reiterate that there is a magic number and that each case must be evaluated on its own merits, this will certainly cool building efforts in the telecommunications industry, “he said.

” the convergence seems therefore the only way to go for consolidation “.