Telekom ‘surprised’ by EC objections to Tele2 merger

Deutsche Telekom has expressed surprise after the European Commission addressed a statement of objections to its proposed Dutch merger with Tele2 as part of its ongoing in-depth investigation into the deal.

In its preliminary analysis the Commission raised competition concerns about the effect of the merger on the mobile retail market, notably in the residential segment. The Commission is concerned that the combination of the two companies is likely to lead to price rises for consumers.

Deutsche Telekom said that the combination of the number three and number four operators in the Dutch market would account for only 25% of the mobile market, making it the number three player. It said that the Dutch consumer mobile market is heavily driven by the mobile discounts offered by KPN and VodafoneZiggo as part of their fixed-mobile bundle offerings.

Telekom also said that Tele2 Netherlands to largely dependent on T-Mobile’s network to offer mobile services. It claims that the combination of the pair would create a third sustainable player in the fixed-mobile services segment, while maintaining the current intense level of competition in the mobile segment.

Telekom also maintains that the new company would have the scale to counter what it describes as the dominance of KPN and VodafoneZiggo, which it says are currently unchallenged in their ability to raise fixed broadband prices in the market.

Telekom points to the recent analysis by Dutch regulator ACM that concluded there was a risk of joint dominance by KPN and VodafoneZiggo in the market – the findings of which were themselves criticised by cable body Cable Europe, which also criticised the EC’s perceived partial endorsement of them.

Telekom meanwhile said that the merger would present an opportunity for the EC to show that it was not obsessed with maintaining four players in each market no matter the cost, and that it is willing to support a deal that will accelerate 5G development and unlock further fibre investment in the country.