EU to Telcos: Stop Mergers and Acquisitions but please help me urgently with 5G development

Press conference by Margrethe Vestager, Member of the EC, on the EC fines of over 19.4 million euros to five envelope producers in cartel settlement (EC Audiovisual Services, 11/12/2014)

Press conference by Margrethe Vestager, Member of the EC, on the EC fines of over 19.4 million euros to five envelope producers in cartel settlement last December (EC Audiovisual Services, 11/12/2014)

Last week in the Mobile World Congress 2015 you had the distinct feeling being in an immense supermarket, strolling from isle to isle in order to find the product that you desire. For a deep pocket investor #MWC15 could be an excellent market place where she would be able to put in her “shopping basket” all those startups and SMEs that would make his investment yield great returns.

No M&As for Telcos

As many were spotted doing that last week in Barcelona, there is one “race” of investors that they could see but not touch. Those according to the new EU antitrust chief should be the telcos. The telco industry is not just another industry, particularly in a European market that is fragmented in 28 pieces. The significance of this huge market for Europe’s economy is clear as it is also clear that it is a sector that immediately influences the cost and quality of a principal day to day service for Europeans, communication. More so, currently the industry has become too popular in Brussels and beyond, not only for the upcoming big EU investment on 5G but also because the protectors of the European citizen are currently standing against telcos and whoever is trying to protect them.

Thus, in a polarised “telco environment” in Brussels, the EU absolutely needs the telcos to drive hand by hand on the 5G unchartered motorway, but also is seeking to stop the appetite of the “big fish” to eat the “small fish”. Yesterday’s “Sting of the day” was exactly on the EU’s presence at Mobile World Congress 2015, calling the world’s – not only Europe’s – biggest telcos to light the way of 5G, moving to a common standardisation and launching 5G business in Europe by 2020. However earlier this week we had Mrs Margrethe Vestager, EU Commissioner for Competition, in an interview at Financial Times, showing her absolute determination to frisk the upcoming Telco Mergers and Acquisitions (M&As) in the EU and even step on the break on them.

“I have one interest and that is to make sure that European consumers — that being citizens or businesses — can enjoy relatively innovative markets at affordable prices,” Mrs Vestager stated at FT a couple of days ago. The good Commissioner is being worried by some of the big M&As thriving the EU telco market: the acquisition of Jazztel by Orange in Spain, the merger between Telenor and Teliasonera in Denrmark, the move of Hutchison Whampoa to acquire Telefonica UK, the move of BT to buy EE in the UK and many more.

M&As like M&Ms

You see shareholders of any big company love M&As like M&Ms. They provide fast growth, expansion of business units and know how, some great executives and most of all better margins by getting the price up in a justified manner. But the tricky part is certainly for the consumers then; for them M&As are definitely not like M&Ms, especially when they see the prices of their phone or internet bills going up. And this is the biggest argument of the good Commissioner. Referring to the “Danish merger”, the Danish politician argued on the FT: “It was almost like a textbook example when the merger was announced in Denmark,” …“What happened was that the share price of the incumbent rose more than the share price of the two merging parties, which was immediately interpreted as . . . there would be less competition so that prices could go up.”

Regarding the debate on whether M&As drive investments and growth in the market by default, Mrs Vestager is rather adamant:  “Actually I have seen a number of examples of the opposite.”…“So far it seems as if it is still competition that will lead to investment and not the other way round.”  In addition, she strongly argued that in the US, where the telcos have been let loose to freely buy and merge this has resulted in smaller consumer choice span and at the same time in higher prices. In fact she described that the telco situation in the US gives “very little choice and higher prices than we do in Europe in general”.

European Parliament against Telcos

The newly appointed antitrust Commissioner is clearly finding allies in that coming from the European Parliament. According to ta statement issued by the EP : “in the next-generation broadband sector, the former monopolies have a staggering market share of over 80 %, recalling that effective competition is the best driver of efficient investment.” Furthermore, MEP Tibor Szanyi called on the European Commission to “enforce properly both ex post and ex ante competition rules in order to prevent excessive market concentration and abuse of dominance, underlining that competitive pressure is key to ensuring that consumers can benefit the most from high-quality services at affordable prices”. Finally, the Parliament being worried over the threat of European telcos’ forming monopolies underlines: “in order to maximise investments, telecoms policies should enable all players to make efficient investments by providing them with effective access to non-duplicable network assets and fit-for-purpose wholesale access products.”

Seeking the right balance

All in all, it is a custom for a new antitrust Commissioner to show early her teeth by embarking on early investigations. Let’s all remember here the work of the former antitrust Commissioner Almunia, who indeed launched several antitrust investigations, but the most “tricky” ones like the one of Google he cleverly made sure he passed them on to his successor. So, Mrs Vestager has a lot of oranges in the air currently and we hope she will be able to keep a balanced position, securing both the interests of the European consumer and the profitability of the telco market.

What is very interesting to see though in the coming next weeks in this hot telco debate is how to fit inside the same shoe the extensive needed by the EU “5G aid” and the roaming fees eradication or M&As blockage. The Sting will monitor the issue closely.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Changing healthcare systems with simple technological solutions

The financial sector cripples Eurozone growth prospects

Women must be at ‘centre of peacekeeping decision-making’, UN chief tells Security Council

Black babies more likely to survive when cared for by Black doctors, suggests new study

Ahead of key UN-backed Marrakech migration conference, youth recount harrowing journeys

Is your smart home as safe as you think?

Deal on faster exchange of non-EU nationals’ criminal records

Brussels terrorist attacks: Schengen in danger once again while leaders gather Europe’s multiple broken pieces

Space science now a ‘fundamental pillar’ of 21st century human development: top UN space official

It’s time to ‘eliminate the scourge of conflict-related sexual violence’, urges UN chief

Commission assesses and sets out reform priorities for the countries aiming to join the EU

UN-led Yemen ceasefire monitoring team gets ready to begin operations

Further reforms needed for a stronger and more inclusive Argentine economy

Germany tries to save Europe from war between Ukraine and Russia

EU leaders slammed on anti-tax evasion inaction and expensive energy

What’s an ‘essential service’? Not knowing could block access to key digital services during COVID

DiscoverEU: 15,000 travel passes up for grabs to explore the EU this summer

Artificial Intelligence raises ethical, policy challenges – UN expert

Brussels to tear down the trade wall with Mexico as opposed to Trump’s “walls”

The impact of COVID-19 pandemic on mental health

5 surprising ways digital technology is changing childhood

EU Youth Conference in Amsterdam: enabling young people to engage in a diverse, connected and inclusive Europe

CEOs as activists: should leaders speak up about social causes?

Alarming number of Ebola deaths in DRC a ‘rallying cry’ to scale up treatment

Three trends shaping the future of mobility in 2020

How Africa’s women can drive the 4IR forward

More attacks, ‘persisting security challenges’ threaten progress in West Africa, Sahel

EU-China: Council authorises signature of the agreement on geographical indications

COP21 Breaking News_03 December: Argentina Accepts KP Amendment

Remarks by H.E. Ambassador Zhang Ming At the Reception in Celebration of the 70th Anniversary of the Founding of the People’s Republic of China

‘I thought I’d never get out alive’ – the Muslim director who interviewed neo-Nazis

Dark spots on EU humanitarian aid spending

Want a fairer society? This economist says he has the answer

European Commission calls on national political parties to join efforts to ensure free and fair elections in Europe

Norway is known for its cold weather – but it’s been in the grip of a severe heatwave

UK must end ‘unlawful’ administration of Chagos Archipelago ‘as rapidly as possible,’ top UN court rules

We need better alignment between climate and trade. Here’s a roadmap

Using the quarantine to your advantage

ECB reaches the boundaries of its mandate to revive the entirety of Eurozone

Green Deal: measures to step up the fight against global deforestation

Tourism and transport: Commission’s guidance on how to safely resume travel and reboot Europe’s tourism in 2020 and beyond

Macron defends the idea of European sovereignty

At last some rules on banks

Vaccines: from miracle to possible danger

Iran: BBC and other broadcast journalists harassed; families threatened – UN experts

The European Commission, European Investment Bank and Breakthrough Energy Ventures establish a new €100 million fund to support clean energy investments

Coronavirus Response: Commission welcomes ‘Best Practices’ to provide relief for consumers and businesses

Better air pollution data is helping us all breathe easier. Here’s how

How a 3-point plan could help rebuild business for the long-term

Corruption undermines democracy and contributes to instability, warns senior UN anti-crime official

Close to final agreement on the EU Banking Union

5 charts that explain big challenges facing Italy’s new government

Take Care of In Order to Be Taken Care of

We’re all in the same boat on the SDGs. Here’s how we steer a course

Global aid needed for healthcare

European Commission: Does Apple, Starbucks and Fiat really pay their taxes?

Practicing healthcare: Skills of a good healthcare professional and its effects

How Sierra Leone is using 3D printing to become a model state

Coronavirus (COVID-19): Latest news from Monday’s World Health Organization briefing

Security Council gravely concerned by Ebola outbreak in DR Congo, demands immediate end to violence hampering response

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s