Regulators obsessed with consolidation four to three is a tragic number
This is a merger investigation, the regulator says, so no one is allowed to move until the opportunity is lost?
UK regulator Ofcom has ‘softened its stance’ on mergers and possible price collusion between the UK’s big four mobile operators, but telecoms analyst Strand Consulting has warned that regulators in general may have a secret hold on Understanding 4 to 3 Mobile Mergers. Although Ofcom is rapparently now more open to mergers in the UK, the UK Competition and Markets Authority, which Ofcom advises to support and the European Commission could take longer to move. Fears of price hikes were raised in response to a statement from Ofcom: “Our position on a potential merger would be informed by the specific circumstances of that particular merger, rather than the number of competitors.”
Can Vodafone’s Nick read the play?
Reports claimed Vodafone CEO Nick Read wanted a merger to improve the company’s performance, under pressure from new activist investor Cevian. Read called for a change in perception of the outcome of mergers between European mobile operators. In particular, he sought to allay fears about so-called “four-to-three mergers,” arguing that consumers could actually benefit from truly fast fiber infrastructure.
BT Copper older than Dixon of Dock Green
Consumers in the UK feel they are being misled by ‘broadband’. As a consumer complained on a discussion forum on ISP exam: ‘The copper which [BT sends round to] our house is older than Dixon of Dock Green.” Read last week confirmed he was speaking to European telecoms strategists to stress to regulators that the industry needs to consolidate before it can stimulate economically. Read confirmed that Vodafone was going to Iliad in Spain, as well as competitors in Germany, Italy and the UK, including Three.
Merging on the Orient Express
As merger mania sweeps across Europe, ThreeUK CEO Robert Finnegan also said the UK mobile market needs consolidation as its infrastructure is “below average” compared to many other countries. “As things stand, the UK doesn’t have the quality of mobile infrastructure it deserves,” Finnegan said. “Investments are too dispersed among too many players, which means our networks are below international standards.” Finnegan said consolidation in the industry could improve networks. “Getting from four to three mobile players in the UK would mean better and smarter investment in networks, which in turn would improve the quality and scale of connectivity in Britain and trigger more competition” , Finnegan said.
Merger Brings More Choice, Better Deals
Telecoms analyst Strand Consult says it has battled consolidation blockages for 22 years since it first wrote the Merger 5 to 3 in 2000 report. According to his latest report Understanding 4 to 3 Mobile Mergers there may be preconceived obsessions among regulators that there is a “magic number” of minimum necessary mobile network operators. “Number 4 has gained some traction,” says report author and founder John Strand. This worries competition authorities so much that they think they should pay particular attention to mergers that reduce the number of operators from 4 to 3.
Is 3 the magic number or the axis of evil?
In the past the THIS authorized mergers such as H3G Italy/WIND/JV in 2016 with corrective measures and banned them between H3G/Telefónica UK) mergers 4-3, although the Tribunal later overturned the 2016 H3G/Telefónica UK decision in 2020, according to Strand’s report. “Outside of Europe, the US Federal Trade Commission (FTC) and Federal Communications Commission (FCC) have approved T-Mobile’s acquisition of Sprint, but with remedies. The Australian Privacy Commission Competition and Consumer Affairs (ACCC) found in 2019 that three networks delivered an effectively competitive outcome to consumers,” reports Strand.
However, there remains a major danger facing telecom operators, warns Strand. “Operators derailed their success by telling a story that was too good to be true,” the report said. “Some operators don’t believe the facts are enough to convince authorities that they have a strong case.”