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Mobile merger concessions sought

04 февраля 2010

Pressure is intensifying for France Telecom and Deutsche Telekom to make concessions to gain regulatory approval for the proposed merger of Orange and T-Mobile in the UK.

British regulators on Wednesday said they had asked the European Commission for the right to investigate the planned joint venture between France Telecom’s Orange UK and Deutsche Telekom’s T-Mobile UK.

The Office of Fair Trading, which considers British merger cases, said its initial view was: “The joint venture threatens significantly to affect competition in mobile telecommunications in the UK.”

The merger between Orange and T-Mobile would form the UK’s largest mobile operator, with 29.5m customers. Orange and T-Mobile are the third- and fourth-largest operators.

The OFT said if the European Commission were to agree to its request to review the merger, it would consider whether to refer the matter to the UK Competition Commission for an in-depth investigation.

France Telecom and Deutsche Telekom have been publicly insisting there is no case for concessions to secure regulatory approval, but the OFT’s action could force a rethink.

One person involved in the proposed merger said there was a willingness to consider concessions.

An inquiry by the OFT, followed by an investigation by the Competition Commission, could be considerably longer than scrutiny by Brussels.

It would increase the risk that Orange and T-Mobile could lose customers to rivals if, for example, employees are distracted by a protracted regulatory process.

The European Commission has until March 1 to decide whether to agree to the OFT’s request to investigate the merger.

The joint venture would reduce the number of mobile network operators from five to four. The combined Orange/T-Mobile entity would overtake Telefonica’s O2 UK subsidiary and Vodafone’s British business.

James Barford, analyst at Enders Analysis, said the Orange/T-Mobile entity would probably have to make “very significant concessions” during a Competition Commission investigation, and did not rule out the proposed merger being vetoed.

One probable area for concessions by France Telecom and Deutsche Telekom is radio spectrum.

The Orange/T-Mobile entity would hold the vast bulk of spectrum at the 1800 MHz bandwidth, which is suitable for a new wireless technology called LTE that will enable faster web surfing by mobile phones.

Consumer groups that have expressed concern about the merger welcomed the OFT’s action.

Philip Cullum, deputy chief executive of Consumer Focus, said: “Consumers in the UK have benefited from a competitive mobile market in recent years and we would be concerned about any reduction in competition and choice.”

Orange and T-Mobile said the merger would be good for Britain, adding they were in close contact with the competition authorities.

Источник: Financial Times

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