The largest foreign investor in Britain is to review its plans in the UK amid mounting fears that its £10.25 billion offer to buy O2 will be blocked by competition regulators.
European officials will meet telecoms operators on Monday to discuss a bid by Three, which is owned by CK Hutchison, for O2.
The deal is backed by Sky and Virgin Media and CK Hutchison has pledged to invest £5 billion in the combined network and to freeze data prices.
However, executives fear that conditions to the deal being considered by regulators will scupper the benefits of combining the two networks. Opponents of the deal argue that reducing the number of mobile networks from four to three could lead to higher prices for consumers.
“They [CK Hutchison] have invested heavily in the UK because they believed the country had consistent, predictable and transparent regulation. That is clearly not the case, so how could they not review future investment plans,” an investment bank adviser said. Almost £10 billion of potential investments are under review, the adviser added. A spokesman for CK Hutchison refused to comment.
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CK Hutchison, which is controlled by Li Ka-shing, Asia’s richest man, has its roots in Britain’s historical trading links with Hong Kong. The group employs 40,000 UK staff and has invested almost £35 billion, including £13 billion in building the Three mobile network.
It owns Northumbrian Water, Wales & West Utilities, Northern Gas Networks, Seabank power station near Bristol, Southern Water, Cambridge Water and EDF’s energy distribution business.
It also has three British ports, Felixstowe, Harwich and Thamesport, and a big presence on the high street through Superdrug, the UK’s second-largest health and beauty chain, The Perfume Shop, Savers and Three’s mobile phone stores.
Doubts over CK Hutchison’s commitment to the UK could prove embarrassing for George Osborne, who has courted Chinese investment in Britain.
Several senior executives from the Asian conglomerate have flown to the UK in recent weeks for talks with regulators in attempts to allay fears that the mobile deal will harm consumers. CK Hutchison executives are said to have been angered by the public intervention of Sharon White, the Ofcom chief, who has argued against the deal.
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A collapse of the O2 deal could have ramifications for CK Hutchison’s wider ambitions to consolidate the European telecoms market and may leave it hamstrung in Britain.
Telefónica, the owner of O2, is rumoured to be working on an alternative plan if the deal fails. It will sell the network’s masts to an investor after it made a similar move in Spain, its home market, this year.
It is not the first time CK Hutchison has clashed with British authorities. In 2012, Canning Fok, its managing director, warned David Cameron that the group could quit the UK telecoms market unless it received assurances it would be protected in the auction of airwaves needed to launch 4G.