EC approves Dutch MNO merger but T-Mobile still in a weak position

The economic mess which is the Dutch communications market continued to grow last week, when T-Mobile NL’s acquisition of Tele2 was approved without conditions by the European Commission.

Any regulator that allowed Liberty Global’s UPC to buy fellow cableco Ziggo, to create a de facto monopoly in both broadband and TV; and then let it merge with Vodafone to create a local telco challenger; can hardly get upset when the third and fourth-placed mobile operators try to huddle together for warmth. Initially the Commission had expressed grave doubts, but realistically, it had little chance of blocking the deal, given the previous developments.

The Commission did go to all the trouble of running an in-depth investigation, which has taken almost a year. Competition Commissioner Margrethe Vestager said in a press release: “Access to affordable and good quality mobile telecom services is essential in a modern society. After thoroughly analyzing the specific role of T-Mobile NL and the smaller Tele2 NL in the Dutch retail mobile market, our investigation found that the proposed acquisition would not significantly change the prices or quality of mobile services for Dutch consumers.”

The newly combined company will have around 25% of the mobile market, though without much of a fixed line network (it inherits some from Tele2), so it will find it tough to compete in 5G without intervention from the Commission on backhaul pricing from incumbent KPN, in order to keep it alive through that transition.

Only the active involvement of the new entity’s parent, Deutsche Telekom, with its negotiating strength around Europe, can possibly keep the third-placed Dutch MNO healthy, by spending hard on new fiber and using this to launch fixed wireless and 5G networks in the Netherlands.

Tele2 has tried vainly to break into the Dutch market and first grew as an MVNO, then bought its own spectrum in 2012 and went to the expense of building a 4G network, and roamed with T-Mobile to boost coverage. Just how the new entity will develop a video strategy against one of the best funded players in Europe,Vodafone-Ziggo, is not clear. The new company will have revenues of €2bn and some 4.3m mobile customers.