TeliaSonera and Telenor merger falls apart after companies fail to woo EC

TeliaSonera and Telenor have called off merger in Denmark having failed to agree on conditions set by the European Commission.

The European Commission has blocked a TeliaSonera and Telenor merger in Denmark that would have reduced the number of mobile operators from four to three.

Sweden's TeliaSonera and Norwegian operator Telenor have walked away from a proposed merger in Denmark after failing to meet conditions set by the European Commission.

The rivals announced the plan to merge in December, claiming the deal would boost investments in networks and technology and benefit Danish consumers.

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Danish EC competition boss Margrethe Vestager opened an investigation in April with concerns the deal could lead to higher prices and less innovation and fears the two remaining rivals, TDC and Three Denmark, would provide insufficient competitive constraints.

TeliaSonera and Telenor are Denmark's second and third largest operators behind TDC. The merged entity would have become the nation's largest operator.

TeliaSonera and Telenor already operate on a shared network under a deal that was approved by the Danish competition authority in 2012.

The companies said it was no longer possible to gain EC approval for the proposed transaction.

"TeliaSonera and Telenor will continue to compete and deliver products and services in the Danish market through our respective original, and still fully up-and-running Danish operations," said Kjell Morten Johnsen, executive vice President and head of Telenor region Europe.

"In our view, creating a market player with the scale and ability to compete and invest would ensure that customers and businesses would benefit from better quality, speed and coverage," said Robert Andersson, executive vice president and head of region Europe in TeliaSonera.

The failed merger comes amid spate of acquisitions in Europe's telecoms market as operators attempt to offset falling revenues by splitting costs. Some of the largest include BT's acquisition of EE in the UK, and Hutchison Whampoa's purchase of UK mobile operator O2 from Spain's Telefonica.

In June, Vestager warned that she didn't buy the the claim by incumbent operators that if they can't merge with rivals they cannot boost investments.

"I've heard this claim quite often, but I have not seen evidence that this is the case... Instead, there is ample evidence that excessive consolidation may lead not only to less competition and more expensive bills for consumers, but that it also reduces the incentives in national markets to innovate," said Vestager.

Today, the commissioner said that she had not been convinced the merger would be beneficial for consumers.

"Every case has to be assessed on its own facts and merits. In this specific case, based on the Commission's in-depth analysis and evidence gathered, we are convinced that the significant competition concerns required an equally significant remedy. This means the creation of a fourth mobile network operator. What the parties offered was not sufficient to avoid harm to competition in Danish mobile markets."

The EC has cleared some telecoms mergers in recent months despite competition concerns. To clear French operator Orange's acquisition of Jazztel in Spain, Orange agreed to sell off its FTTH network covering about 800,000 buildings in several major Spanish cities as well as grant the buyer wholesale access to Jazztel's national ADSL network for up to eight years. As in Denmark, the merger reduced the number of national operators in the country from four to three.

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