The EU Antitrust slows down the consolidation in mobile telephony
The telecommunications operators are crying misery for the too low tariffs and hope for the consolidation of the market at least in mobile telephony. On this point there is no agreement with the European Commission which is putting its foot down on 19 billion merger of euros between Orange e Masmovilrespectively the second and fourth mobile operators in Spain, as it could reduce competition in mobile to the detriment of consumers. This is what emerges from the first ones findings communicated by the EUwhich will have to take the final decision on the green light for the operation by 4 September.
Iliad’s precedent in Italy
Last Tuesday the Commission sent operators a list of findings concerning the merger proposal, announced a year ago to create the second Iberian operator behind of Telefonica and before Vodafone. One of the possibilities being studied to prevent the user from seeing rate increases is the sale of part of the network of both companies to the competition. A scheme already followed in Italy at the time of the merger between Wind e Tre and which resulted in the appearance of Iliad. The French operator has given the final blow to mobile rates by tenfold the data traffic and practicing very low monthly subscription prices. The result is that the large operators namely Tim and Vodafone they had to adapt and therefore the merger produced the opposite result to that hoped for by the companies, not an increase but a decrease in tariffs, but with great benefit for consumers. The problem is not only of profits but also of investments. Indeed the telcos for accomplish the goals of digital infrastructure, they will have to spend approx 200 billion by 2030.
The Spanish market
As for the Iberian case, there are already some Spanish virtual operators ready to enter the game if the EU decides to sell part of the network of the two operators in the event of a merger. Avatel, Finetwork and Digi Mobil are three of the companies that would bid for these “remedies”. The advantage of having your own network is that you no longer depend on the infrastructure of other operators. With the result of exacerbating tariff competition even more. Finetwork it would already be negotiating the conditions with the banks to obtain the necessary funds to acquire the networks from Orange and MásMóvil. Avatel is also making a move and Digi Mobil, a company of Romanian origin, would already have the economic strength to acquire the infrastructure. It would therefore be the best positioned operator for this operation. DigiMobil is the fifth operator in Spain immediately after Telefónica, Orange, Vodafone and MásMóvil.
Telephone and Vodafone
If a deal with remedies is approved, the big losers would be the major operators Telefónica and Vodafone. Jose Maria Alvarez-Palletepresident of Telefonica, had said that the best thing for the sector would be an operation without conditions. As for Vodafone, the situation is complicated. The operator has lost customers in Spain for years and has also reduced revenues and could proceed with a partial but also total sale of its Spanish subsidiary. And, in view of this possible operation, the entry of a new competitor will further reduce the value of Vodafone Espana, which the upper echelons of the British company do not want to happen, of course. Orange and Masmovil must now respond to the Commission’s findings but they are confident on the outcome of the agreement.
The British case
Things could be better in Great Britain for the announced merger between Vodafone e Three Uk i.e. the two smallest operators in the country. The closing of the transaction will come by the end of 2024 and will only need to be assessed by the UK antitrust authorities. However, even in this case the outcome is not obvious given that in 2016 the British authority had rejected the merger between Three e O2. According to analysts, the Antitrust examination of this operation could last up to 18 months.