Light Reading – Eurobites: 3 and O2 Deal to Fail – Analyst
Hutchison Whampoa’s planned £10.25 billion ($14.3 billion) takeover of UK mobile operator O2 is heading for the skids, according to Bengt Nordström, the CEO of consultancy and market-research company Northstream. Hong Kong-based Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) hopes to merge O2, currently owned by Spain’s Telefónica , with its own 3business in the UK to create a new mobile market leader. But the deal would reduce mobile competition in the UK, leaving the country with just three network operators, and is being scrutinized by European competition watchdogs, which have recently taken a dim view of such in-country consolidation. Nordström reckons authorities will kybosh the tie-up but says he hopes he is wrong. “It will send a negative signal to the investment community,” he told Light Reading at last week’s Mobile World Congress in Barcelona.
Nordström, one of the industry’s most respected analysts, has previously said that a merger between 3 and O2 would provide a counterweight to BT Group plc(NYSE: BT; London: BTA), which completed its own £12.5 billion ($17.5 billion) takeover of mobile market leader EE earlier this year. An EU decision on Hutchison’s takeover of O2 is expected to be announced by April. (See UK Needs O2/3 to Challenge BT/EE – Analyst.)