EC's Ansip sides with Vestager on telecoms M&A

Andrus Ansip, the European Commission's vice president in charge of the Digital Single Market, said "industry consolidation is not necessarily the answer" to achieving future connectivity targets across the European Union, although he said there could be some advantages to cross-border consolidation.

The comments appeared to pour cold water on a renewed call by leading telecoms companies for a more lenient approach to mergers in the sector. An earlier statement signed by the CEOs of 11 companies on the executive board of industry body ETNO said the EC should consider investment, innovation, efficiency and quality of service in their assessment of mergers.

"Our sector is in need of building scale and markets need to function at optimal levels. Consolidation, which creates that scale, will lead in turn to better outcomes for our customers, especially in light of the increasing demands on networks and services in the future," the statement said.

In his speech at the FT-ETNO summit in Brussels this week, Ansip appeared to reject such claims, noting that mobile operators across Europe are already investing in 4G/LTE networks without merging their operations.

"Modern network-sharing technologies allow operators to share mobile networks, without the need for consolidation," he said. "However, a degree of consolidation can also bring potential benefits. Cross-border consolidation, for example, can be a way to integrate networks as we move towards a pan-European telecoms market."

Ansip's comments chime with similar arguments from European Competition Commissioner Margrethe Vestager, who has adopted a harder stance on in-market telecoms mergers in Europe than her predecessor since taking office last year.

For example, at a recent conference of antitrust experts in New York, Vestager confirmed that the Commission had been "on the road to prohibit" the planned merger of TeliaSonera and Telenor's mobile units in Denmark before the two operators decided to abandon the transaction.

She also noted that "research seems to suggest that a reduction of the number of players from four to three in a national mobile market in the EU can lead to higher prices for consumers. But not that it leads to more investment per subscriber. In other words, it does not seem to lead to significantly higher overall investment by carriers."

Reuters noted that comments by Vestager and Ansip are causing some to fear that consolidation could now come to an abrupt halt, affecting planned deals such as the proposals by CK Hutchison to buy O2 in the UK and Wind in Italy and Liberty Global's bid for Base Belgium.

Indeed, Ansip's comments appeared to come as a surprise to some executives in the audience at the FT-ETNO summit. Reuters said many thought he would have been more receptive to their arguments that consolidation would lead to higher network investments.

Roger Wilkinson of Newton Investment Management told Reuters that he had heard some things at the summit that "cause concern."

"I'm flabbergasted by the Danish decision -- simply just don't understand it," he added.

For more:
- see the speech by Commissioner Andrus Ansip
- see this Reuters article
- see the ETNO statement

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