Moody's: M&A may not bring desired benefits for operators

Conditions imposed by the European Commission on mergers between telecoms operators in the region could limit the competitive impact of consolidation that is desired by operators, according to a new report by ratings agency Moody's.

The Financial Times reported on the main findings of the report, which was published for subscription-only access on Wednesday. The paper noted that the conditions imposed on Hutchison Whampoa's proposed acquisition of O2 Ireland, for example, would mean that price competition would be unlikely to ease in the market.

Hutchison Whampoa is required to sell part of its network capacity to mobile virtual network operators (MVNOs) in order to ease EU anti-trust fears that a reduction in the number of mobile operators to three from four would result in higher prices for consumers.

The company's European unit H3G has committed to sell up to 30 per cent of the merged company's network capacity to two MVNOs in Ireland at fixed payments. To facilitate this, H3G committed to divest five blocks of spectrum in the 900 MHz, 1800 MHz and 2100 MHz bands. The spectrum will be available for 10 years, starting from January 1, 2016.

It's now believed that the Commission will take a similar approach in Germany, where Telefónica Deutschland is hoping to buy E-Plus from KPN, in the process also reducing the number of operators to three.

That merger is now understood to be close to gaining regulatory approval after Telefónica reportedly offered to open up 30 per cent of a combined Telefónica Deutschland and E-Plus network to three MVNOs.

According to the FT, Moody's said that the main beneficiaries from telecoms M&A could be cable operators such as Liberty Global, as such companies would be able to secure advantageous MVNO deals.

For more:
- see this Financial Times article (sub. req.)

Related Articles:
Telefónica close to gaining approval on E-Plus German bid
Telefónica continues to court Liberty Global as part of E-Plus bid
Telefónica shares 2013 transformation process results; awards shareholders large dividend
Vodafone, ComReg slam EC for clearing O2 Ireland acquisition
EU clears Hutchison's €780M acquisition of O2 Ireland, with concessions

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.