The European Commission has opened an in-depth Phase II review of TeliaSonera and Telenor’s proposed mobile joint venture in Denmark.
European telcos will be keeping a keen eye on proceedings, seen as a test case for how the new Commission will…
The European Commission has opened an in-depth Phase II review of TeliaSonera and Telenor’s proposed mobile joint venture in Denmark.
European telcos will be keeping a keen eye on proceedings, seen as a test case for how the new Commission will treat four-to-three mobile consolidation deals.
In a statement today Margrethe Vestager, Commissioner in charge of competition policy and a Dane herself, commented: “Telecoms constitute an important service in many people’s daily life. My aim is to make sure that the proposed transaction will not lead to higher prices for Danish consumers and businesses.”
In March Vestager questioned operators’ assertions that consolidation equalled greater investment in networks. She said she had seen instances where this was not the case and argued that it was in fact competition that led to investment.
One Brussels source previously told TelecomFinance that they believed it was significant that Vestager’s first mobile merger review affected her homeland, where she is likely to have political ambitions following her term at the Commission.
The regulator has 90 working days, until 19 August 2015, to come to a decision on the merger.
The pooling of TeliaSonera and Telenor’s telecoms assets in Denmark is an extension of a relationship that began in 2012 with a network sharing agreement. It will create the largest player in the country in terms of both revenue and number of subscribers and because of this the Phase II review was widely expected. Outlining its concerns about the tie-up, the Commission said it was worried that the “transaction could reduce the merged entity’s and its competitors’ incentives to compete, leading to higher prices, loss of innovative offers and lower quality on the Danish retail mobile telecommunications market.”
The regulator also noted that the merger would reduce the number of wholesalers, which would reduce the choice of alternative host networks for MVNOs and put them in a weaker negotiating position.
Denmark’s mobile market would be considerably altered by the deal, which would see two very large players in the shape of TeliaSonera-Telenor and incumbent TDC, and then the considerably smaller Hutchison Whampoa-owned 3.
“The merger would result in a highly concentrated market structure with two large and symmetric operators at the retail and wholesale level. The Commission has concerns that this could lead to coordination between the remaining operators.”
In a statement of its own, TeliaSonera outlined its case, arguing that the merger was necessary since it would enable the companies to free up resources, increase investments and compete – to the benefit of consumers and businesses.
“Continued investments in telecommunications infrastructure is a pre-requisite for keeping up with consumers’ and businesses’ demand as well as redeeming the potential for growth, competitiveness and innovation high on the political agenda in both Denmark and the EU,” TeliaSonera said.
The company said it remained confident the merger would be approved before the end of the year.
The review could have implications for consolidation in the UK as Hutchison’s US$15.3bn takeover of O2 – another four-to-three transaction – is due to be reviewed soon.
