TeliaSonera expects extended EU probe of Danish phone merger
By Bloomberg
TeliaSonera AB expects an extended review of its bid to merge its Danish business with that of Telenor ASA, one of the first test cases in the telecommunications industry for European Union Competition Commissioner Margrethe Vestager.
“We haven’t anticipated a quick process, rather on the contrary,” TeliaSonera Chief Executive Officer Johan Dennelind said in a phone interview Thursday. “This is something that will go on the major part of this year.”
The European Commission has an April 8 deadline to decide whether to approve the deal or push it to a longer review that can add four months to examine antitrust concerns on how it affects rivals and customers. Vestager, Denmark’s finance minister until taking the EU post last year, has said consumer benefits are central to her scrutiny of phone deals. The merged carrier will have about 40 percent of the Danish market and annual sales topping 9 billion kroner ($1.3 billion).
TeliaSonera will seek to make regulators understand that the merger is “not just about price, it’s about the quality and security of our various networks and products in the future,” Dennelind said. A rising number of successful phone mergers across Europe is “a good sign” for the industry.
Ricardo Cardoso, a spokesman for the European Commission, declined to comment on a possible extended review of the deal.
‘Huge Demands’
TeliaSonera shares declined 0.1 percent to 55.05 kronor at 10:56 a.m. in Stockholm, after gaining as much as 0.5 percent earlier in the session. Telenor fell 0.1 percent in Oslo after climbing 0.7 percent earlier.
Carriers are seeking savings through mergers as European industry revenue slides amid stiff competition -- there are more than 100 wireless operators in Europe compared with four major ones in the U.S. Sales at European carriers fell to $374 billion last year, compared with growing revenues in North America and Asia, according to data compiled by Bloomberg.
Regulator’s discussions should focus on “what is required to deliver not just low prices in the future but also good quality networks that deal with the huge demands being put on the quality and security of our operations,” Dennelind said.
Dennelind declined to comment on possible concessions the companies may have to offer to allay EU concerns. Hutchison Whampoa Ltd. had to help so-called virtual operators enter the Austrian and Irish markets to win EU approval while Telefonica SA pledged to cede network capacity, spectrum and assets when the EU allowed it buy E-Plus in Germany.
Not Ideal
Despite these concessions, the EU was criticized for allowing deals that shrank the number of mobile-phone operators in Austria and Ireland to three from four. Austrian regulators said prices rose as a result of Hutchison’s takeover of Orange Austria while Irish authorities said the EU failed to tackle the amount of spectrum Hutchison built up when it bought Telefonica’s O2 unit in the country.
Vestager said in January that she didn’t think it was “an ideal situation to have a few, very large companies” active in one industry and that a share price spike for TDC A/S, the largest Danish mobile-phone operator, on news of the joint venture between its two rivals showed analysts assumed the deal would mean less competition.
Hutchison agreed this week to buy O2’s U.K. unit to create Britain’s biggest wireless provider by customers. The deal will need the approval of the European Commission, the company said, and should be completed by June 2016. The company is also in talks to buy VimpelCom Ltd.’s Italian business, people familiar with the matter said last month.