Hutchison Whampoa announced yesterday (25 March) that it had agreed to buy Telefónica’s subsidiary in the United Kingdom, mobile operator O2, for €12.6 billion. Combining O2 with Hutchison Whampoa’s own UK brand, Three, will create the largest mobile operator in the UK. The combined entity will have almost 33 million customers.

“The combination of Three UK and O2 UK will create a business with unmatched scale and strength that will allow us to better compete against other operators in the marketplace and will also enable us to provide even better service and innovation to UK customers in a market that will remain fully competitive,” said Canning Fok, group managing director of Hutchison Whampoa.

The European Commission, which is expected to review the deal, will want to know more about the combined entity’s scale and strength. It has repeatedly raised objections to deals – such as this one – that reduce the number of mobile network operators from four to three.

Two of those transactions involved Hutchison, when it bid for Orange Austria in 2012 and O2 in Ireland in 2014. A third featured Telefónica’s bid for KPN’s German subsidiary E-Plus in 2013.

The Commission’s decision to approve those deals subject to conditions has drawn criticism from rival mobile operators – often those that do not own a network – as well as from some analysts.

The merger is likely to provide the first test of how the new Commission will deal with mergers in the sector. When Joaquín Almunia was the commissioner for competition in 2010-14, incumbent operators including Telefónica, Orange and Deutsche Telekom implored him to relax the merger rules for the sector so as to allow firms to consolidate and, they argued, increase profits to feed investment.

Sources close to the deal said that the parties had yet to engage directly with the Commission. They predicted that it would be months before the deal would be formally notified.