Three Ireland’s €850m deal for O2 rubber stamped by EU

Three has been given the green light to push ahead with a deal to buy Telefonica’s O2 arm in Ireland that will result in the formation of the country’s second largest mobile network behind Vodafone.

Related: Ofcom allows Vodafone, O2 and Three to repurpose 2G and 3G spectrum for 4G

The European Commission decided to approve the €850 million [£690 million] deal after initially expressing misgivings and the takeover is contingent on various conditions related to network capacity and mobile virtual network operator [MVNO] services, according to The Register.

To this end, Three must provide extra network capacity and MVNO services to at least two other companies operating in the country as well as offering the option for those firms to buy additional spectrum in future if required.

It has already signed one such deal with Liberty Global-owned UPC and as a result the broadband and TV provider will be able to offer its customers mobile services in 2015 that are powered by Three’s newly enlarged Irish network.

The EU had originally vetoed the deal as it was worried that Three, which was the smallest of the country’s four mobile phone operators, would have less of an incentive to give customers lucrative offers that would help it to grow. In addition to this it stated that the network sharing agreement between Eircom and O2 could be affected with this having the ability to derail the former’s ambitious network roll-out plans.

Vodafone, Ireland’s largest mobile operator as it stands, has reacted angrily to the deal and is already reportedly investigating whether it is possible to take legal action against the deal under both EU and Irish law.

“Vodafone also has significant concerns that the proposed remedies will distort healthy competition rather than preserve it, and will act as a barrier to future investment in next generation communications in Ireland.”

In an attempt to curry favour with the European Commission, Hutchison Whampoa, the company that owns Three Ireland, had argued that it needed to takeover O2 to become profitable in the country and 2013 was the ninth straight year it reported a loss – a total over that time of €540 million [£438 million].