Norway puts brakes on TeliaSonera's Tele2 buyout over competition fears

Swedish-Finnish carrier TeliaSonera needs to convince Norway's regulators that its acquisition of Tele2 Norway won't lead to higher prices for consumers.

Norway's competition authority may block Telia's proposed acquisition of Tele2 in Norway, because it fears a union between the operators will lead to higher prices and lower quality services.

TeliaSonera's SEK 5.1bn ($746m) plan to buy rival Tele2 was announced in July. 

While TeliaSonera and Tele2 say the deal will be good for consumers and shareholders, Norway's Competition Authority (NCA)  today said it may move to block the takeover, citing fears that with just two main operators in the country — Telia and Telenor — consumers will face higher prices and worse service.

"The Norwegian mobile telecommunications market is already highly concentrated. This acquisition reduces the number of mobile network operators in Norway from three to two. We fear that the acquisition will harm the competitive climate," the NCA's director general Christine Meyer said in a statement.

"The result is likely to be higher prices and lower quality for consumers. The NCA has therefore warned the parties that it considers blocking the deal," she added.

At the time it made its offer for Tele2, TeliaSonera promised to accelerate its 4G rollout to reach 98 percent of the population by 2016, instead of its original deadline of 2018, on the condition the deal was cleared by regulators.

Post-acquisition, TeliaSonera, which operates as NetCom in Norway, would nearly double its share of mobile subscriptions from 23 percent to 40 percent, giving it a total of 2.7 million subscribers. Rival Telenor's 3.2 million mobile subscribers represent around a 50 percent share of the market.

TeliaSonera has already submitted proposals it hoped would allay the NCA's concerns but these were deemed insufficient by the regulator.

TeliaSonera has until 22 December to respond to the NCA's statement of objections and explain how consumers would be impacted by the acquisition.

"We and Konkurransetilsynet make different assessments of what is good for competition and how that affects the customers. Now we will analyse their objections carefully and then continue the dialogue," said Robert Andersson, head of TeliaSonera's European region.

Tele2, which is headquartered in Sweden, sought an exit from Norway after it failed to secure spectrum for 4G. The operator was beaten to the spectrum by Access Industries — a holding company owned by Ukraine-American billionaire Len Blavatnik — which owns Nordic mobile broadband operator Ice.net.

Contingent on the NCA's approval of the Norway deal, Tele2 in October announced plans to sell parts of its network to Ice, which could help it become a more considerable mobile player in Norway. As part of that deal, Access also agreed to lease frequencies on the 900MHz band from Tele2.

TeliaSonera hoped a deal between Ice and Tele2 would clear the path for its acquisition of Tele2 Norway, which it is aiming to complete by the first quarter of 2015.

"This has a very positive impact on the competition on the Norwegian market. It helps to meet the political target according to which there should be three mobile networks in the country, while it also guarantees network access to Tele2's customers until spring 2015, when the traffic will be switched over to our network," August Baumann, CEO of TeliaSonera Norway, said in October.

The NCA said it will make a final decision on the acquisition by 15 January 2015. 

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