skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Ovum view


Hutchison (owner of mobile operator Three) has announced it is in exclusive talks with Telefonica for a proposed acquisition of its UK subsidiary O2 for more than £10bn. The move would reduce the number of UK mobile network operators from four to three and make the combined entity the largest in terms of customer numbers.

The regulatory spotlight shifts to Europe

The biggest concern will be the impact on consumers, particularly at the lower end of the market– a segment Three has catered to very well. While consolidation is being encouraged and similar deals have been approved in Ireland and Germany, sceptics are likely to point to what is currently happening in Austria, where Three also acquired a rival. Recent research suggests that since that transaction, prices have been rising – and the hardest hit have been customers on low-cost monthly tariffs.

Long-term observers of the UK mobile market will know that Ofcom, and before it Oftel, has made it a priority to ensure a competitive mobile market. Ofcom has fought tirelessly of late to preserve the four-player market structure, and has particularly valued Three’s disruptive nature and innovation around tariffs. At one point the auction of 4G mobile spectrum nearly didn’t happen because of in-fighting around the rules to ensure that all four operators emerged with enough spectrum to be “credible nationwide operators.” However, this time it won’t be Ofcom that has the final say. If the deal concludes, EC competition authorities will take control. In other markets, such as Germany and Ireland where we have seen similar consolidation recently, the EC has focused its attention on two main areas: spectrum holdings and MVNO access.

A combined Three & O2 would result in a concentration of the lower frequency spectrum (ideal for providing coverage), yet would have no higher frequency spectrum at 2.6GHz, which is needed for capacity given consumers’ insatiable appetite for data. Interestingly, a merged BT & EE would have the lion’s share of that higher frequency spectrum and, as part of that transaction, would also likely have to give up some of the airwaves. By mandating MVNO access, the EC will hope to strengthen and maintain competition between the main network operators, and may even be keen to see Three & O2 guarantee a certain amount of network capacity to newcomers. Other recent developments in the UK market suggest that Sky could be an interested party here.



Matthew Howett, Practice Leader, Regulation

Recommended Articles

  • Internet of Things

    IoT Viewpoints 2018

    IoT Viewpoints explore the IoT opportunity in 2018 and beyond. Download our latest e-book to get our newest collection of thought leadership articles on the emerging IoT trends, technologies and opportunities.

    Topics IoT

  • Consumer & Entertainment Services

    US pay TV: Is it facing an existential threat?

    By Adam Thomas 28 Mar 2018

    With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.

  • Enterprise Services

    5G: Another technology in search of enterprise use cases

    By Evan Kirchheimer 26 Apr 2018

    Service provider interest in justifying 5G investment through its potential to open new revenue streams from the enterprise segment is growing ever greater.


Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700

Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

Email us at

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 788 597 5160 or email us at

Contact marketing -

Already an Ovum client? Login to the Knowledge Center now