While the c ollapse of TeliaSonera and Telenor’s Danish merger plan on Friday suggests a tough road ahead for other European telecoms players involved in the consolidation process, European competition commissioner Margrethe Vestager insists that all cases will be judged individually.
"Every case has to be assessed on its own facts and merits," Vestager said in a statement.
Her comments came after TeliaSonera and Telenor revealed that they had failed to reach agreement with the European Commission to enable their 50:50 joint venture to go ahead in Denmark.
As analysts at Standard and Poor’s pointed out earlier in the week, all eyes were on the Danish deal, since it would likely provide further visibility on the new Commission’s stance on competition. There had been indications that Vestager would take a harder line than her predecessor Joaquín Almunia, which could have implications for a number of telecoms operators, including Hong Kong’s CK Hutchison, whose 3UK business has agreed to acquire the U.K. unit of O2, while 3 Italia is in the process of creating a 50:50 joint venture with Wind in Italy.
But Vestager insists that the wrangling in the Denmark case related to that market alone.
"In this specific case, based on the Commission’s in-depth analysis and evidence gathered, we are convinced that the significant competition concerns required an equally significant remedy," she said.
"This means the creation of a fourth mobile network operator," she insisted. "What the parties offered was not sufficient to avoid harm to competition in Danish mobile markets."
TeliaSonera and Telenor reportedly offered to sell off spectrum and facilitate network access to alternative players. And last week Reuters claimed the pair were willing to sell sell a 40% st ake in their infrastructure business to a new player and offload Telenor’s BiBob prepaid unit.
Vestager has drawn criticism for her insistence on a fourth network operator in Denmark, given that TeliaSonera and Telenor already share networks in the country.
"The failed Telia and Telenor merger in Denmark is a textbook example of type 1 regulatory errors, mistakenly prohibiting procompetitive activity," said Danish telecoms analyst John Strand, in a lengthy diatribe against the European Commission’s decision in this case.
"Regulators and competition authorities are locked in a paradigm of judging competition by counting the number of players on the market, not by assessing the larger dynamic, technological and competitive trends," he said.
There are already only three mobile networks in Denmark, in addition to a raft of mobile virtual network operators (MVNOs), Strand points out. "Denmark has some of the lowest rates in the EU and world for advanced wireless services in business and residential markets," he said. "The ARPU is just €13-€15 for unlimited voice, SMS, MMS and 4G data."
Some have questioned whether fellow Dane Vestager "wants to avoid appearing to be soft on her homeland," Strand noted.
Telcos in the U.K., Italy and elsewhere in Europe will find out soon enough whether that is indeed the case.
