In the mobile business, regulators can play havoc with your share price.
Just look at what happened last week. Reports of potential setbacks in Sprint and T-Mobile’s merger approval process in the US caused each firm to lose almost 5% of its value.
It was a different story for T-Mobile in the Netherlands last year. EU regulators said it was fine for the firm’s Dutch venture to acquire Tele2 Netherlands, reducing the number of operators in that country from four to three.
That came as a bit of a surprise. Brussels imposed drastic remedies in four-to-three mobile mergers in Germany and Ireland and rejected outright the proposed deal between Hutchinson and Telefónica in the UK.
In telecoms, you never quite know what’s around the corner. That’s why you need a firm understanding of competition policy, with an awareness of the latest approaches and how they have evolved.
Mobile industry association the GSMA has argued that government interventions to address problems in competitive markets are being undermined by ‘regulatory policies designed for a bygone era’.
‘European companies often justify their mergers by saying they need to find efficiencies and synergies,’ says Tom Kiedrowski of the Cedar Tree Advisory Service. Tom will be speaking at our ‘Regulating Competition in Mobile Markets’ training course in June. You can download the brochure here.
‘They say they need to operate on a larger scale in order to compete with huge US competitors. Regulators may sympathise, but they want to know what this means for consumers. Mergers usually lead to prices going up!’
On the other hand, is it really efficient to have multiple competing networks? ‘That requires a lot of investment that eventually has to be recouped,’ Tom says. ‘How sustainable is that? Some operators may well end up going out of business. Mergers have to be allowed at some point.’
Find out what the twists and turns of mobile regulation mean for YOUR business by signing up for our ‘Regulating Competition in Mobile Markets’ training course. You can register here or download the brochure here.•