Vodafone, KPN wade into Orange-Hutchison merger debate

4 Oct 2012

UK-based Vodafone Group and KPN of the Netherlands have criticised European Union (EU) antitrust regulators who are scrutinising Hutchison Whampoa’s proposed EUR1.40 billion (USD1.87 billion) bid for France Telecom-Orange’s Austrian mobile unit, suggesting that the EU watchdog’s intervention has a narrow focus which could block future mergers and investments in the sector. EU competition commissioner Joaquin Almunia has been one of the most outspoken critics of the long-running merger attempt, but now Reuters reports that the chief executives of Vodafone, KPN and Orange have all waded into the debate. The CEOs have urged a regulatory re-think on consolidation, arguing that more mergers are needed in Europe in order to meet the need for investment and spur economic activity across the continent.

Vodafone CEO Vittorio Colao told the Financial Times’ ETNO summit in Brussels: ‘The solution has to be found in scale and consolidation. Commissioner Almunia has complained that there are not enough cross-country deals – he needs to ask the question why. We need to allow consolidation. We should not worry how many operators a single country has, we should be a bit more American’. His comments were echoed by KPN counterpart Eelco Blok, who said: ‘Today the regulatory environment is an obstacle to growth. Scale is very important in the telco business. Consolidation or network sharing is an issue today, and this needs to change in Europe to be able to sustain competitiveness’. Finally, Stephane Richard, CEO of FT-Orange, a man with a vested interest in the matter, commented: ‘The Austrian example is quite illustrative. There are four operators, and now there is a crazy, foolish project to go from four to three operators, and this causes a problem for the EU? We have a major problem with the way competition policy is seen in Europe. Just recall that in China there are only three operators and that is not a small country compared with Austria. We need a deep, deep change in competition policy in Europe’.