To the unconditional EU approval for Dutch deal of Deutsche Telekom and Tele2, investors and telecom companies are hoping that, towards the merger in Europe’s telecom sector, this can possibly be an indication of flexible regulatory position.
The telecom industry remained in argument with European Commission to aspect that mergers is an assisting factor adopted by the companies not only for enhanced revenues but it also make the telecom companies to further invest in the sector and this view of broader picture should be considered while making decision upon the mergers cases.
Being feature specific to the Dutch market, the approval of the Dutch deal despite being a positive sign, could not be counted as EU’s major regulatory shift for telecom sector.
Declining the possibility of practicing of non competition for each other by the mobile network operators and chances of higher prices for the consumers, which the Commission was initially thinking of to be the effects of merger, on Tuesday it officially approved the merger deal.
After blocking of Telenor and Telia Company merger bid in 2015 by the Margrethe Vestager, European antitrust chief, who in Britain also stopped the deal of CK Hutchison a year later, the telecom sector in Europe become under restriction by the regulator.
Possible outcomes including turning down of Network infrastructure development, declining innovations and price escalation for the consumers were the foundations of the stance of EU Commission, refusing the merger of companies becoming three from four. In order to balance such outcomes, merging companies were forced by the authorities to better emphasize on a new or an existing smaller rival to be merged with.
For telecom industry to become able to step in a more healthy corporate competition with the internet rivals and striving for the cash for 5G roll outs, operators termed the view point of regulators as short-sighted.
In a client note Barclays wrote that after the Deutsche Telekom deal, Europe will possibly be experiencing takeovers and mergers.