This M&A will be a litmus test for Margrethe Vestager, the European version of an antitrust commissioner.
As per multiple sources familiar with the matter at hand, CK Hutchison Holdings has struck a network-sharing deal with Virgin Media and Sky TV worth 10.3 billion pound ($14.5 billion).
In the proposed deal will result combing Hutchison’s Three Mobile units with Telefonica’s O2 to create Britain’s single largest mobile operator. Many see it as a litmus test for Europe’s tough anti-trust commissioner Margrethe Vestager.
So as to counter regulatory concerns, Hutchison has entered into informal agreements to sell 20% of its stake in the combined company to Sky and 10% of its stake to Virgin Media, which belongs to Liberty Global.
Currently, Virgin Media, a cable company piggybacks on the EE network to provide its services.
The sector was given a clue on Vestager’s stance six months ago, when her tough demands torpedoed a merger of TeliaSonera with Telenor in Denmark.
To further allay regulatory concerns, Hutchison has disclosed last month it is prepared to sell 30% of its capacity to one or several of its rivals. If this deal is allowed to go forward the number of UK network operators will be reduced from four to three.
All three companies, Sky, Hutchison and Virgin Media have declined to comment.
The European Commission will have to give its decision on this deal by May 19.