By imposing tough conditions on network mergers, the European Union
(EU) is in danger of heating up price competition rather than reducing
it through sector consolidation.
Moody’s makes the warning in a report seen by the Financial Times.
The
ratings agency pointed to stringent ‘competition remedies’ required in
Ireland before the EU was willing to wave through the merger of O2 and
Three, the respective subsidiaries of Telefonica and Hutchison Whampoa.
Vodafone, which has operations in Ireland, was up in arms about the merger conditions, as was regulator ComReg. They both fear increased competition.
Under
the remedies laid down by Brussels, up to 30 per cent of the merged
O2/3’s network capacity must be sold to two MVNOs. There’s also an
option that one of them becomes a fully-fledged network operator at a
later stage.
... The competition remedies have yet to be decided in Germany, but Ivan
Palacios, telecoms analyst at Moody’s, is sceptical that operators will
see much of a consolidation dividend.
“What is clear from Ireland
is that the competition authority wants to maintain a competitive
environment,” he said, quoted by the Financial Times. “There has not been the market repair that we thought might come with market consolidation.”
by Ken Wieland
read full article at Mobile World Live http://www.mobileworldlive.com/eu-competition-remedies-threaten-consolidation-benefits-moodys
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