While a flurry of telecom deals are underway in Europe, the new European Union competition commissioner, Margrete Vestager, is starting to stake out a position against too much consolidation on the continent. Speaking in a video interview with The Deal, Vestager said that she would take a balanced approach to such deals, noting that competition is absolutely essential for consumers.
Vestager expressed particular concern over mergers and acquisitions that reduced the number of large competitors in a market from four to three — as is currently underway in the U.K.
“I do not think it’s the ideal situation to have very few, very large companies, especially not in a situation where the markets are still very national,” Vestager said. “Even though companies would like to grow bigger and consolidate, from a consumer point of view, it’s very important that we enhance competition.”
The U.K. market is being reformed by BT’s planned purchase of EE from its joint owners, France’s Orange and Deutsche Telekom. In addition, Hutchison Whampoa, which operates as Three in the U.K., is also in talks to buy Telefónica’s O2 operations in the country.
Hutchison’s Three Italia is also rumored to be nearing a deal to purchase Vimpelcom’s Wind operations in Italy, according to a report by The Financial Times (subscription required). And France’s Orange has hinted that it is interested in a possible merger with Telecom Italia as well as looking for possible consolidation within France.
Vestager’s remarks indicate she would look at many of these potential mergers, especially those that merge companies within national boundaries, with a high degree of skepticism.
More telecom news from Europe, the Middle East and Africa:
• MegaFon taps Nokia Networks for LTE in Russia. The operator has signed a seven-year deal with Nokia Networks to upgrade its Russian network. Nokia Networks will use its Single RAN Advanced platform based on the Flexi Multiradio 10 base station to implement MegaFon’s LTE network. The new service is expected to launch first in the Moscow, Central and Caucus regions.
• Iliad’s new offers raise fears of new French price war. France’s No. 4 operator Iliad Free, which is known for its market disruption, launched a new low-priced, triple play, set-top box based on Google’s Android software. At the same time, Free offered users of its “Freebox” two additional mobile subscriptions – for a total of four – at a discount price. According to The Wall Street Journal, news of Iliad’s coming announcements caused competitor stocks to plunge on Monday, but they started to recover on Tuesday after the offer details were disclosed.
• Vodafone offers M-Pesa between Tanzania and Kenya. The popular mobile money payment service has now crossed the border between the two east African countries. M-Pesa customers can use the low-cost service to transfer money through a combined network of 180,000 agents. According to Vodafone, a cross-border transfer through traditional channels can cost up to 31% of the transaction, whereas a transfer of $50 using M-Pesa costs about 1% of the transaction plus a foreign exchange fee.
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