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European regulators take tough line on telecoms M&A

15 October 2015

The European Commission poured cold water on calls by telecoms companies on Tuesday for a more lenient approach to mergers in the sector, fuelling fears that a wave of consolidation in the sector could come to an abrupt stop.

The EU's digital chief, Andrus Ansip, said consolidation was "not necessarily the answer" and operators were already investing in newer networks without merging, reports Reuters.

"Relaxing competition rules is not the answer," Ansip told a conference held by the Financial Times and telecoms lobby ETNO. "Industry consolidation is not necessarily the answer either."

Ansip's comments are in line with a harder stance on telecoms mergers taken by European Competition Commissioner Margrethe Vestager, who took office last year.

She recently scuppered a deal between TeliaSonera and Telenor in Denmark over concerns it would lead to higher prices for consumers, marking the first time such a deal had been blocked since telecoms companies began an M&A spree two years ago.

"Investors are still trying to understand the ramifications of the Denmark decision," said Henrik Nyblom of Schroders Investment Management. "Hearing Mr Ansip today makes me extremely nervous about going to the office in the next few days."

Ansip's position came as a surprise to executives in the audience who thought that the vice-president in charge of fostering a digital single market would have been more receptive to their arguments that consolidation would permit higher network investments.