The European Commission (EC) has opened an in-depth investigation to assess whether the proposed joint venture between Danish operators Telia and Telenor is in line with the European Union (EU) Merger Regulation. In a press release, the Commission disclosed that it ‘has concerns that the merged entity would face insufficient competitive constraint from the two remaining players in its domestic mobile market’, which could lead to higher prices and less innovation. According to the EC, the transaction would also lead to a reduction in the number of mobile network operators (MNOs) able to offer wholesale services, thus reducing the choice of alternative host networks, and weakening the negotiating position of wholesale customers. Finally, as the merger would result in a highly concentrated market structure with two large and symmetric operators at the retail and wholesale level, the Commission has concerns that this could lead to coordination between the remaining operators. EU Competition Chief Margrethe Vestager commented: ‘Telecoms constitute an important service in many people’s daily life. My aim is to make sure that the proposed transaction will not lead to higher prices to Danish consumers and businesses’. The regulator said that it has until 19 August 2015 to make a decision.
As previously reported by TeleGeography’s CommsUpdate, Telenor and TeliaSonera signed an agreement in December 2014 to merge their Danish businesses in a 50/50 joint venture. The two companies agreed that the valuation of their respective companies approximated, and the agreement is therefore based on equal ownership; differences in net debt and other changes from signing to completion of the transaction would be settled in cash. If approved by the EC, the deal would create the largest mobile operator in the Danish marker both in terms of revenues (DKK9 billion [USD1.5 billion]) and subscribers (3.5 million), ahead of current leader TDC and smaller player Hi3G Denmark.