TeliaSonera’s SKr5.1bn (US$744m) deal to merge fellow Swedish telco Tele2’s Norwegian assets with its own is in jeopardy following opposition from the Norwegian Competition Authority (NCA).
The authority has issued a statement of objections against…
TeliaSonera’s SKr5.1bn (US$744m) deal to merge fellow Swedish telco Tele2’s Norwegian assets with its own is in jeopardy following opposition from the Norwegian Competition Authority (NCA).
The authority has issued a statement of objections against the transaction, which would reduce the number of established mobile network operators in the country from three to two.
TeliaSonera has already submitted remedies in an attempt to reassure the regulator, but they were not considered sufficient.
NCA director general, Christine Meyer, feared that the acquisition would harm the competitive climate.
“The result is likely to be higher prices and lower quality for consumers,” she said.
“The NCA has therefore warned the parties that it considers blocking the deal.”
A statement of objections does not prejudge the final outcome of an investigation, the regulator emphasised in its statement.
The companies now have until 22 December to reply to NCA’s objections in accordance with the Competition Act. The regulator then has until 15 January to make its final decision.
In response, Robert Andersson, head of the Europe region at TeliaSonera, commented: “We and [NCA] make different assessments of what is good for competition and how that affects the customers. Now we will analyse their objections carefully and then continue the dialogue.”
When the deal was first announced, TeliaSonera offered to speed up its 4G rollout to cover 98% of the population by 2016, instead of 2018, as an olive branch to regulators.
Meanwhile, Mats Granryd, president and CEO of Tele2 AB, expressed dismay at the statement of objections: “We are concerned regarding the statement from the Norwegian competition authority to reject the transaction between Tele2 Norway and TeliaSonera, despite significant remedies offered to the third network operator in the country.”
“This will potentially jeopardise the creation of a dynamic mobile market in Norway with two strong competitors to the incumbent.”
At the start of October, Tele2 inked an agreement with new entrant Access Industries-owned Ice Communication to gain access to part of its 900 MHz spectrum until April 2015.
In return, Ice will be able to buy parts of Tele2’s Norwegian network infrastructure once its merger with TeliaSonera closes, providing NCA approves the deal.
When Tele2’s pact with Ice was announced ,TeliaSonera Norway CEO August Baumann said the company would help “to meet the political target according to which there should be three mobile networks in the country”.
Access disrupted Norway’s mobile sector when it beat Tele2 to spectrum in an auction last year, but Ice only has a small share of the market offering rural services using 450 MHz airwaves.
TeliaSonera’s acquisition of Tele2 Norway would boost its market share from 23% to around 40%, with 2.7 million subscribers. However, that would still leave it behind incumbent Telenor, which has roughly 3.2 million customers.
The Norwegian merger is seen as key to whether there could be broader consolidation across the Nordics. Denmark, in particular, is seen as ripe for M&A activity with four network operators slugging it out in a market of only around seven million subscribers.
