Eurobites: 3 & O2 Deal to Fail – Analyst
News Analysis Iain Morris, International Editor 3/1/2016
Today's news digest is dominated by merger and acquisition activity, and especially the role of regulators in allowing big deals to be consummated... or not.
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 Three UK business 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.)
European Union authorities have given their seal of approval to Dell Technologies (Nasdaq: DELL)'s $67 billion takeover of data-storage company EMC Corp. (NYSE: EMC), according to the BBC. EU approval comes shortly after the companies secured backing from US authorities for what is set to be the world's biggest-ever tech M&A deal. Dell is looking to position itself as a major force in the international cloud market, as well as in the Internet of Things and the virtualization of global IT. "There you have it -- a complete software-defined data center solution, hardware and all," said Heavy Reading Principal Analyst Caroline Chappell on news of the deal last October. (See Dell Buys EMC for $67B in Biggest Tech Deal Ever.)
South Africa's Vodacom Pty. Ltd. has given up trying to buy local Internet service provider Neotel (Pty) Ltd. from India's Tata Communications Ltd. after running into regulatory obstacles, according to a report from Bloomberg. The companies had already made concessions to secure approval from competition authorities, with Vodacom cutting Neotel's spectrum permits out of the deal and Neotel promising to offer roaming arrangements to other operators. Even so, the deal had been opposed by rivals, including MTN Group Ltd. , Telkom SA Ltd. (NYSE/Johannesburg: TKG) and Cell C , all of which had argued it would put Vodacom in a dominant position in the market for high-speed Internet services.
Turkcell Iletisim Hizmetleri A.S. (NYSE: TKC) has made an offer to buy Telia Company 's 58.55% stake in Fintur, a holding company for telecom operations in a number of central Asian markets. Turkcell already owns the other 41.45% stake in Fintur, while TeliaSonera is keen to exit the region and focus on activities in the Nordic region. TeliaSonera's operations in central Asia have been rocked by a mixture of competitive, economic and regulatory forces and the operator's reputation has also suffered amid allegations of corruption in Uzbekistan. (See TeliaSonera: Timing May be 'Wrong' for Eurasia Sale.)
— Iain Morris, , News Editor, Light Reading
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