Three's plan to buy O2 has been blocked by the EU

In early 2015 it was revealed that Three's parent company Hutchison was planning to buy Telefonica's O2 brand to make the UK's largest mobile network - but now the deal has been blocked.

European Commissioner for Competition Margrethe Vestager revealed the outcome on Twitter before making an official announcement confirming the deal had been blocked.

She said the decision was reached "to serve UK consumers - affordable prices and innovation".

It means UK will continue to have four major networks in the form of Vodafone, Three, O2 and EE. That means more competition and hopefully lower prices than if Three and O2 were to merge.

It's all over

Vestager continued, "Allowing Hutchison to takeover O2 at the terms they proposed would have been bad for UK consumers and bad for the UK mobile sector. We had strong concerns that consumers would have had less choice finding a mobile package that suits their needs and paid more than without the deal.

"It would also have hampered innovation and the development of network infrastructure in the UK, which is a serious concern especially for fast moving markets. The remedies offered by Hutchison were not sufficient to prevent this."

However, Hong Kong-based Hutchison Whampoa doesn't see it that way. It told us in a statement that it was "deeply disappointed" buy the decision, and added that it will consider its options, including "the possibility of a legal challenge."

It said: "We strongly believe that the merger would have brought major benefits to the UK, not only by unlocking £10 billion of private sector investment in the UK's digital infrastructure but also by addressing the country's coverage issues, enhancing network capacity, speeds and price competition for consumers and businesses across the country and dealing with the competition issues arising from the current significant imbalance in spectrum ownership between the UK's MNOs."

Uncertain future

Meanwhile a spokesperson for O2 said, "The O2 business has continued to perform well in the market whilst the Commission process has taken place. Our customers are our priority and we will continue to differentiate, compete fiercely and remain successful, long into the future."

Techradar has contacted Three for comment but has yet to receive a reply - we'll update when we do.

Telefonica previously confirmed it planned to talk to other potential buyers of the business, but it's uncertain whether that process has started yet.

Kester Mann, Principal Analyst, Operators at CCS Insight said: "The collapse of the deal leaves both Three and O2 in a precarious position with uncertain futures in the UK. It also casts serious doubt over the future structure of a European telecoms sector that had banked on the tie-up paving the way to further consolidation.

"The most likely eventual outcome for O2 is sale to private equity, however Liberty Global, which owns Virgin Media, could consider a bid. Sale or partial-sale to a deep-pocketed operator from outside the UK such as Softbank or America Movil is also plausible.