T-Mobile Netherlands has secured unconditional approval for acquiring rival Tele2 Netherlands. In the end, no formal remedies were needed to convince the European Commission authorities, which had earlier expressed concerns about the impact on competition from reducing the market to three mobile operators. Completion of the takeover is expected in January.
The European Commission conducted an in-depth investigation of the merger, which was first announced at the end of 2017. Commissioner Margrethe Vestager, in charge of competition policy, said: "After thoroughly analysing the specific role of T-Mobile NL and the smaller Tele2 NL in the Dutch retail mobile market, our investigation found that the proposed acquisition would not significantly change the prices or quality of mobile services for Dutch consumers".
T-Mobile would still remain in third place on the mobile market, as Tele2 has a relatively small share of around 5 percent, taking the combined group to 25 percent, the Commission found. Furthermore, the merger would not increase the likelihood of coordinated behaviour among mobile operators, as the other two network operators, KPN and VodafoneZiggo, are more focused on cross-selling to fixed customers. Finally, the Commission does not expect the MVNO market to be adversely affected by the removal of one network.
The Commission worked closely with the Dutch consumer, competition and telecom regulator ACM, and the Dutch authority said it supports the EC's decision.
T-Mobile Netherlands CEO Soren Abildgaard said he was pleased with the decision and this is the "best result for the Dutch consumer and businesses". He said the company will stick to the promises made earlier in the course of discussions with the Commission.
Promises remain
The pledges are expected to support increased competition with the established duopoly of KPN and VodafoneZiggo. They include maintaining Tele2 as a second brand in the market with its offer of unlimited data for EUR 25 per month, with no change in the price for three years. In addition, T-Mobile will expand its fixed services with investment in active fibre network coverage and accelerate the launch of 5G, including fixed-wireless services. The operator also promises to offer consumers more choice with no fixed contract or CPE restrictions.
FMC over mobile
T-Mobile expects the merger will give it a stronger position in the market and make it better able to compete on the growing segment of fixed-mobile convergence. The merger will take it from third place on the mobile market to a more equal market share with number-two Vodafone, while also adding Tele2's fixed customer base and network assets. The unconditional approval from the Commission suggests the merged company's stronger position on the FMC market weighed more heavily than concerns about a possible negative impact on the retail market.
After completing the deal, the focus will be on integrating the two companies, and T-Mobile said it will put the interests of customers and employees first. The process will take some time, the CEO said.
4 to 3
The news brings to an end Tele2's attempt to break open the Dutch market as the fourth mobile operator. After growing to become the largest MVNO, the company bought its own spectrum at the end of 2012 and built a 4G network, while relying on a roaming deal with T-Mobile to boost its coverage. By the end of Q3 2018, it had reached EBITDA breakeven with over 1.3 million customers, good for a 6.4 percent share of the market, according to Telecompaper estimates. Tele2 will remain active on the Dutch market through a 25 percent stake in the combined company after completing the deal with T-Mobile.
Competitive market
The Commission said its investigation found that the Dutch mobile market "is competitive with some of the lowest mobile prices in the EU and high network quality". In addition to the network operators, there is an active MVNO market, with providers such as Simpel and Youfone providing further competition.
According to the latest research from Telecompaper, T-Mobile and Tele2 Netherlands had a combined share of 29.4 percent of customers on the Dutch mobile market in Q3, ahead of Vodafone with 24.5 percent. Excluding wholesale Sims, the combined group has moved into second place in the past year, helped by their launch of of the first unlimited data plans in the Dutch market in early 2017. In Q3, T-Mobile and Tele2 had a pro forma share of 25.4 percent of retail customers, while Vodafone dropped to third place with 23.9 percent of retail customers.
Deutsche Telekom said the enlarged company will have pro-forma revenues of over EUR 2 billion and around 4.3 million mobile postpaid subscribers. The company expects annual synergies of around EUR 150 million from the merger within three years of closing.
