The European Commission’s new competition commissioner has questioned the link between consolidation in telecoms market and increased investment.
Telecoms operators have strongly suggested the connection when making the case for M&A in the sector,…
The European Commission’s new competition commissioner has questioned the link between consolidation in telecoms market and increased investment.
Telecoms operators have strongly suggested the connection when making the case for M&A in the sector, especially as networks in the EU lag behind those in the US and Far East.
Speaking in an interview with the Financial Times, Margrethe Vestager said she had seen a number of instances in which consolidation had led to lower levels of investment.
The former Danish Minister for Economic and Interior Affairs said she felt that competition led to investment, and “not the other way round”.
In recent years, under the stewardship of Joaquin Almunia, the watchdog’s stance towards M&A in the sector appeared to have softened after allowing four-to-three mobile consolidation in Austria, Ireland and Germany. In return, the operators involved have had to offer significant remedies, which centred on improving provision for MVNOs to piggy-back on their networks.
Austria was the first market in which such a tie-up was allowed, where 3 Austria bought Orange Austria for €1.3bn. In January the Vienna Chamber of Labour said the cost of mobile voice and SMS for consumers had risen by roughly 29% between September 2013 and December 2014, while the cost of data increasing by 78% over the same period.
Vestager’s comments come as the Commission prepares to review three deals which would cut the number of operators in Spain, Denmark and the UK.
The commissioner said her main focus was on citizens being able to enjoy “relatively innovative markets at affordable prices”.
The antitrust authority has already announced that Orange’s takeover of Spanish fixed-line operator Jazztel will be subject to a Phase II review.
It is also set to review four-to-three mobile transactions in Denmark – between TeliaSonera and Telenor – and in the UK, where Hutchison Whampoa is looking to finalise the acquisition of Telefonica’s business in the country, O2.
Last week it was reported that UK regulator the Competition and Markets Authority had been lobbying to review Hutchison’s purchase of O2, if agreed.
In recent years national regulators have tried and failed to review big telecoms deals rather than allowing the Commission to do so, partly driven by the perception that Brussels took a softer stance. Vestager’s comments suggest that this may be set to change.
