Tycoon Li Ka-shing’s right-hand man defended to European regulators a proposed US$15 billion deal to buy British mobile-phone operator O2, The Wall Street Journal reported.
Canning Fok Kin-ning, managing director of CK Hutchison Holdings Ltd. (00001.HK), said the combination of O2 and Three, the Hong Kong-based conglomerate’s British carrier, would be followed by a five-year price freeze for consumers.
He said the combined firm would invest £5 billion (US$7.3 billion) in the business over the same period.
Fok said Li’s flagship company would allow competitors to buy fractional ownership stakes in its British mobile network, instead of having to buy wholesale network capacity.
This would cut out the middleman and allow competitors on CK Hutchison’s mobile network to offer lower prices to consumers.
“CK Hutchison’s move is the opening salvo in what is likely to be a long and intense period of negotiation with the European Commission,” Kester Mann, an analyst at CCS Insight, wrote in a note.
“Today’s announcement is the first step, but it is unlikely to appease [the commission’s] competition chief, Margrethe Vestager, who has adopted a hard-line on in-market mergers.”
Last week, the chief executive of British telecommunications regulator Ofcom warned that the proposed merger could raise prices for consumers and hurt competition among British mobile carriers.
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