Merkel backs calls for European telco consolidation

German chancellor Angela Merkel added her voice to calls for European regulators to allow consolidation in the telecoms market, as the European Commission (EC) added another proposed deal to competition authorities' job lists.

German chancellor Angela Merkel

German chancellor Angela Merkel

Merkel took the unusual step of commenting on the need for consolidation as the EC considers proposed acquisitions in Germany and Ireland that are considered key to a string of other planned mergers and acquisitions in the European telecoms industry.

The German leader said European companies' global performance depends on a balanced approach to competition in individual markets, and that the digital economy should be a priority for the EC, the Financial Times reported.

Germany's leader joins politicians in France in calling for regulatory change that will encourage consolidation among mobile operators. French politicians gave tacit approval for the number of operators in the country to be reduced from four to three when they backed a proposed acquisition of SFR by Bouygues, although the plans were scuppered when cable operator Numericable won SFR instead.

The FT noted Jean-Claude Juncker, a leading candidate for the post of European Commission president, recently said competition rules in the region must change to allow mergers and acquisitions to proceed.

For now, the EC is pressing ahead with the application of its current competition rules. It revealed on Thursday it is investigating a proposed acquisition of Netherlands-based cable operator Ziggo by telecoms group Liberty Global, which operates the UPC cable network in the Netherlands.

The Commission is probing the deal's potential impact on competition, because the combined company would have greater wholesale buying power with content owners, and the transaction would cut the number of companies available to consumers.

In a potentially worrying development for those encouraging consolidation among European telecoms companies, the EC also revealed it has suspended the deadline for feedback on the latest concessions offered by Telefónica Deutschland to gain clearance for its planned €8.6 billion ($11.8 billion) acquisition of rival E-Plus.

The EC originally set a deadline of May 5 for comments--a timeline that left Telefónica Deutschland confident of gaining final approval for the deal by June 23.

A decision on a planned €780 million acquisition of Telefónica's Irish business by Hutchison Whampoa remains on track to be announced June 20, the EC stated.

The GSM Association this week said Europe's complex regulatory regime is stymieing consolidation among the region's telcos, and called on regulators to back market-driven restructuring to encourage investment and drive the region's competitiveness.

For more:
- see the EC press release
- see this Financial Times article (subscription required)

Related Articles:
For European telecoms operators, 4 is a crowd
Telefónica Deutschland remains confident on E-Plus approval in Q2
German regulator wants merged Telefónica, E-Plus to cede spectrum
3 Ireland offers to set up new mobile operator if EC clears O2 acquisition
Report: EU to raise objections to Telefónica's E-Plus deal

Suggested Articles

Qualcomm may finally be moving closer to purchasing NXP. A Beijing official reportedly said the deal is "looking more optimistic now."

T-Mobile says that the integration of the Sprint network will be similar to its integration of MetroPCS and will in some ways be even easier.

After years of fits and starts, Sprint and T-Mobile announced a plan to merge their operations. Here is our complete coverage of this news.