DT counters EC’s preliminary concerns on T-Mobile/Tele2 Netherlands merger

14 Sep 2018

The European Commission (EC) has issued a preliminary statement raising concerns about potential effects on competition from the proposed merger of T-Mobile and Tele2 in the Netherlands. In its preliminary analysis the Commission flags up the possibility that the combination of the third and fourth largest Dutch mobile operators could lead to price increases in the retail consumer market. T-Mobile’s parent Deutsche Telekom (DT) yesterday issued its own counter-statement disagreeing with the EC’s concerns, highlighting the promises its Dutch subsidiary has made regarding the Tele2 tie-up, which include a pledge to continue Tele2 NL’s unlimited mobile data package costing a maximum of EUR25 (USD29) per month for at least three years after the deal’s closure. T-Mobile has also declared that the merger would enable it to accelerate 5G network rollout, pledging that it would be first in the Netherlands to launch ‘national 5G’ in 2020, whilst also promising to offer ‘smart NB-IoT solutions free of charge until 2025’.

DT pointed out that the T-Mobile-Tele2 NL merger would not give it a dominant share of subscribers, whilst highlighting that ‘competition in the Dutch consumer mobile market is heavily driven by the mobile discounts offered by [larger operators] KPN and VodafoneZiggo as part of their fixed-mobile bundle offerings’ and therefore the merger would create a more effective converged fixed/mobile competitor to these two dominant multi-play operators (T-Mobile Netherlands having entered the fixed/mobile bundling market in June 2018 with its ‘Klantvoordeel’ [‘customer advantage’] offer).

Additionally, DT pointed to the extensive mobile infrastructure sharing already in place between T-Mobile and Tele2, arguing that ‘this is not a traditional four-to-three [players] merger, since Tele2 NL is to a large extent dependent on the network of T-Mobile NL to offer its mobile services’, and that ‘intense’ mobile competition would continue unabated. Furthermore, DT claimed that ‘the new company would have the scale to effectively counter the dominance of KPN and VodafoneZiggo who are currently unchallenged in their ability to raise fixed broadband prices in the Dutch market.’

T-Mobile NL has also claimed that – if permitted to merge with Tele2 – it will embark on a major fibre-optic internet rollout with partners covering ‘at least two million households and businesses’ as well as an accelerated ‘nationwide’ rollout of 100Mbps xDSL broadband (e.g. VDSL2 Vectoring/Bonding), implying that it would focus on filling gaps left by the direct fibre/superfast xDSL footprint of PSTN incumbent KPN – with such promises fitting neatly with the Dutch government/EU 2025 universal broadband aims, TeleGeography notes. T-Mobile has also promised that it ‘will not raise fixed internet prices for the first three years [after merger completion] except for a correction for inflation’.

DT’s statement ended with: ‘Against this background, the companies will continue a constructive dialogue with the Commission and remain confident that the merger will ultimately be approved towards the end of the year.’ The EC is working to a preliminary end-November deadline to reach a final decision.

Netherlands, Deutsche Telekom (DT), T-Mobile Netherlands, Tele2, Tele2 NL (part of T-Mobile Netherlands)