European Commission approval of TeliaSonera (OMX:TLSN) and Telenor’s (OSL:TEL) proposed Danish mobile merger appears no closer after new proposals met a cool reaction from the market.
European Commission approval of TeliaSonera (OMX:TLSN) and Telenor’s (OSL:TEL) proposed Danish mobile merger appears no closer after new proposals met a cool reaction from the market.
Following last month’s official rejection of their offer to give up spectrum, the Swedish and Norwegian telcos have returned with a new proposal. Under this, they would offload a stake in their planned local network infrastructure unit, TT-Netværket (TTN), according to an EC document seen by TelecomFinance.
Because this will be EC competition chief Margrethe Vestager’s first investigation of a four-to-three mobile transaction, it is seen as a test case for similar tie-ups in the UK and Italy.
Under the new plan, a new entrant could acquire an initial 15% of TTN, which would hold TeliaSonera and Telenor’s network assets, and assign it 15% of the network’s capacity, according to the document. The new entrant would have the option to increase its stake by 5% every 12 months up to a maximum of 40%, and gain a number of network owner rights.
The price would be subject to negotiation and expressed as a percentage mark-up on TTN’s book value. Thirty retail shops, international roaming services and Telenor’s prepaid mobile brand BiBob – which counts more than 140,000 customers – could also be rolled into the agreement, at a cost, to ensure the new player was viable.
John Strand, CEO of Strand Consult, did not think the remedies would be sufficient to win EC approval, or to appease rivals.
Stand said the proposal would be “poison” for the other operators, particularly Three, which would face a new small rival with a superior network. Strand said that TeliaSonera and Telenor could also offer Three a roaming agreement, but that this would add yet another TTN network user, further reducing competition.
The Danish review should not be seen as directly comparable to proposed mergers in the UKand Italy, another industry observer said.
This is because such a merger would leave the smallest player, Three Denmark, with 15% of the market, while TDC and TeliaSonera-Telenor would both have more than 40%.
With the provisional 7 October merger review deadline fast approaching, the regulator remains concerned that a reduced number of players will diminish competition and raise prices for consumers.
