Ofcom urges Brussels to block O2 and Three merger - FT

A worker makes final touches on the logo of British mobile phone company O2 in preparation for the CeBIT computer fair in the northern German town of Hanover March 6, 2006.

(Reuters) - British telecoms regulator Ofcom has urged Brussels to block the merger of O2 UK and Three, which it fears could inflate mobile phone bills in the UK, the Financial Times reported.

"The merger of two of Britain's four operators could also hit rival high-street retailers and upset existing network arrangements." Ofcom's Chief Executive Sharon White told the FT.(

Less than a week ago, French telecom billionaire Xavier Niel's Iliad ILD.PA said it was interested to enter the British market if the planned acquisition of O2 UK by local rival network operator Three creates an opening for Iliad.

Sharon White told the paper that Ofcom has put its arguments to the commission outlining several concerns, and added that while creating a fourth network to replace O2 “might be one answer” for few of her concerns, it would take “time and considerable investment”.

Ofcom’s concerns are expected to be reflected in a forthcoming statement of objections which will be sent to companies involved in the merger, the FT said.

The deal is in a phase two examination by Brussels, but the regulator has increasingly turned more negative towards deals as it feels merging network operators in a particular national market could damage competition.

Reporting by Sangameswaran S in Bengaluru, editing by Louise Heavens