All telecom mergers are subject to antitrust scrutiny. The Rogers-Shaw deal in Canada took two years of vetting before being approved, Inside Towers reported. Now the Brussels-headquartered European Commission’s (EC) antitrust division has opened a formal investigation into the proposed $20 billion Orange-Másmovil merger in Spain that was announced in July, Mobile World Live reported.
The Orange-Másmovil case likely will test how the EC views this and future mergers across Europe where potential 4-to-3 major carrier consolidations could arise in other European countries. The EC’s primary concerns are that with less carrier competition, there are fewer consumer choices so prices could increase, and service quality could decline. The EC also raised the possibility the combined entity could limit MVNO and fixed network operator access to its network, thereby hampering their ability to compete, again leading to higher consumer prices.
Such concerns were raised in the U.S. when the T-Mobile-Sprint deal was announced. At the time, both T-Mobile and Sprint were both third-ranked laggards behind AT&T and Verizon. In the three years since the companies announced the merger, the new T-Mobile has proven to be a formidable competitor, taking market share, and offering attractive prices.
Similarly, the Rogers-Shaw deal will take time to produce results but it is moving forward subject to a number of stringent contingencies that require increased 5G and fiber network investment in key parts of its network, creating jobs, and keeping prices down, Inside Towers reported.
Másmovil was already considered a viable competitor even before the merger deal was announced. The EC’s preliminary assessment found that combining with Orange effectively would eliminate an “innovative and significant rival” in Spain. Margrethe Vestager, EC EVP for competition policy, described Másmovil as “a successful challenger to Orange and other operators in recent years.” To wit, Vodafone made staff cuts in 2021 to lower operating costs in the face of competitive pressures, Mobile World Live reported.
At year-end 2022, Orange was Spain’s second largest operator with 20.2 million mobile and broadband subscribers, Másmovil ranked fourth with 15.3 million. The combined company will compete with established operators, Telefónica, the leading telecom operator in Spain, and third-place Vodafone.
Orange is being cooperative and hopes to demonstrate the benefits of the deal to the Commission. “This transaction is beneficial both for Spanish consumers and the telecom sector as it will ensure the sustainable roll out of 5G and fiber on a wider scale within a very competitive market,” the company said in a statement.
Orange is expected to address the EC’s concerns by offering remedies that could include giving rivals greater access to its network or selling assets. The EC said it will announce a decision on August 21.
By John Celentano, Inside Towers Business Editor
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