TeliaSonera and Telenor have received a statement of objections from the European Commission regarding their proposed mobile joint venture in Denmark.
The antitrust regulator is concerned that the merger – which reduces the number of mobile operators…
TeliaSonera and Telenor have received a statement of objections from the European Commission regarding their proposed mobile joint venture in Denmark.
The antitrust regulator is concerned that the merger – which reduces the number of mobile operators from four to three – will diminish competition and raise prices for consumers.
The ball is now in the court of the Nordic telcos, which will put forward remedies to address the Commission’s fears.
European operators are watching closely, as it is the first time the new Commission will rule on a four-to-three merger. The previous Commission allowed four-to-threes in Austria, Ireland and Germany, but the new Commissioner for competition, Margrethe Vestager, has expressed concerns about such tie-ups.
In March, Vestager questioned operators’ assertions that consolidation equalled greater investment in networks. She said she had seen instances in which this was not the case, and argued that it was in fact competition that drove investment.
Commenting specifically on TeliaSonera-Telenor, she said she wanted to make sure “the proposed transaction will not lead to higher prices for Danish consumers and businesses”.
TeliaSonera and Telenor remain confident that the merger will be approved in the second half of the year and, despite Vestager’s comments, the industry’s expectation is that the Commission will allow mobile consolidation. The key question at this point is what level of remedies the Commission will seek.
In a joint statement, the companies described Denmark as Scandinavia’s most fiercely competitive mobile market, adding that they believed their tie-up was necessary to improve services.
“We remain committed to the Danish market but have also realised that a fundamental change is needed,” the Swedish and Norwegian incumbents said.
“Combining Telia and Telenor in Denmark is about creating a company with the scale and the capacity to better invest and compete – both on price, quality and innovation.”
Investing enough into local networks had become a challenge in recent years, said the companies, warning that if their merger cannot go ahead, the “status quo would lead to a continued drop in investment”.
Sweden’s TeliaSonera and Norway’s Telenor agreed to combine their Danish mobile units last December. The new venture is an extension of the telco’s existing network sharing agreement and will have roughly 3.5 million subscribers, capturing 40% of the mobile market.
