The economic mess which is communications in the Netherlands continues to mount this week, with the deal for T-Mobile to buy out Tele2 going through without remedies attached by the European Commission.
Essentially any regulator that has allowed UPC to buy 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 3rd and 4th place mobile firms try to huddle together for warmth. Initially the Commission had expressed grave doubts, but seriously, it had a snowball’s chance in hell of preventing this.
The Commission, however, went to all the trouble of running an in-depth investigation, which is why this process has taken almost a year. We’re not sure why. 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.”
But then again, Danish born socialist Vestager pushed the Vodafone-Ziggo deal through and has no life experience involving economics and was never elected to this post. He has been a professional politician since the age of 21, so we’re not sure why or how she should know.
Preventing the sale of an operator with just 5% market share, because there is alarm whenever MNOs in any given country go below the magic number of 4 in Europe, is inexcusable, and leaves the combined company on around 25% of the mobile market, but without much of a fixed line network (it inherits some from Tele2), so how is it going to compete in 5G is anyone’s guess and it will need interference from the Commission on backhaul pricing from KPN, in order to keep it alive through that transition.
The Commission says it worked closely with the Dutch consumer, competition and telecom regulator ACM, which it did NOT do over the Vodafone-Ziggo deal, but in this case the Dutch authority said it supports the EC’s decision. Only the involvement of the new owner, Deutsche Telekom and its negotiating strength around Europe, can possibly keep the third placed operator healthy, by spending hard in new fiber and using this to launch fixed wireless networks in the Netherlands. The new operator has promised to offer consumers no fixed contracts or CPE restrictions – like it has a choice?
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. Chances are that if it had not been bought it would have gone quietly bust.
Just how the new entity will develop a video strategy against one of the best funded players in Europe in Vodafone-Ziggo, we’re not sure. The new company will have revenues of €2 billion and some 4.3 million mobile customers.