T Mobile & Orange UK merger vital for competition: T Mobile
www.WirelessFederation.com/news: The 50-50 joint venture, between Deutsche Telekom’s T-Mobile and France Telecom’s Orange in UK announced on September 8, 2009 is crucial for the two companies to be able to compete against bigger rivals.
The announcement was made by T-Mobile UK Managing Director Richard Moat. According to Moat, the margin pressures are altering the competitive landscape and altering the ability to fund the future.
The joint venture proposal is waiting for the nod from European Commission, which will investigate whether there will be any adverse effect on the market, has until Feb. 15 to rule on the joint venture.
UK’s largest mobile operator with a 37% market share will be created if the propsed venture is successful.
T-Mobile and Orange in U.K merger to be reviewed by European Commission
www.WirelessFederation.com/news: A proposal has been filed by Deutsche Telekom AG and France Telecom to the European commission for a joint venture in the U.K. The step is taken four months after the announcement of the deal.
The deal for 50- 50 partnership between France Telecom’s Orange UK and Deutsche Telekom’s T-Mobile was announced on September 8. With 37% market share, the joint venture will create the U.K.’s largest mobile operator ahead of current leaders Telefonica SA’s O2 with its 27% share and Vodafone PLC’s 25%.
The European Commission has time until February 15 to complete the investigation of the adverse effect of the deal on the market. The joint venture may start working by the middle of 2010.
Telecom operators press for Brussel’s scrutiny
www.WirelessFederation.com/news: In order to to scrutinise the proposed merger of their UK mobile phone businesses, France Telecom and Deutsche Telekom are pressing for regulators in Brussels rather than London. The telecoms groups are
hopeful that European Commission’s inquiry would be shorter than one by UK competition authorities.
On the other hand, consumers feel that the proposed merger of France Telecom’s Orange UK and Deutsche Telekom’s T-Mobile UK, Britain’s third and fourth-largest mobile operators respectively will have a negative impact on the competition.
The two groups hope that Brussels will hold on to the case and the final say is of Brussels even if the UK authorities could ask the Commission to send the case to London. France Telecom and Deutsche Telekom are preparing the documents about the merger are under preparation and the companies may submit it to the Commission before Christmas, although it may not happen until January.
The length of the regulatory scrutiny will partly depend on whether France Telecom and Deutsche Telekom are willing to make concessions. Last month the two groups said they saw no need for major concessions, such as giving up valuable radio spectrum.
EU roaming cap to stay says EU Advocate General
British Mobile operators are facing defeat in their battle against EU plans to regulate international roaming rates, after the EU’s Advocate General ruled that the price caps were valid.
Vodafone, Orange, T-Mobile and O2 are challenging plans by the European Commission to regulate roaming charges on voice calls.
Luis Miguel Poiares Pessoa Maduro, the Advocate General and a key adviser to the European Court of Justice, ruled recently that the regulation is in the interests of the internal market in which ‘free movement of goods, services and capital is ensured’.
His decision is non-binding but in vast majority of cases rulings by Advocate Generals are heeded by the European Court of Justice. The final ruling will be delivered over the coming months.
Maduro said in a statement: ‘The differences in price between calls made within one’s own member state and those made while roaming could reasonably be regarded as discouraging the use of cross-border services such as roaming.’
The case was referred to the European Court of Justice in 2007 by the UK High Court.
European Commission pressurises Slovakia to lower wholesale mobile rates
www.WirelessFederation.com/news: Slovakia has been pressurised by Commission to lower wholesale mobile rates. The Commission called the country’s MTRs amongst the highest on the continent, and restated its position on the importance of using long-run incremental costing methodologies for calculating the efficient costs of termination, rather than the fully allocated costing approach proposed by TUSR.
Romano Prodi Versus Telecom Italia
When he took over from Silvio Berlusconi as Italian prime minister earlier this year, Romano Prodi could credibly paint himself as the brave reformer of Italy’s moribund economy.
An economist by training and a former president of the European Commission, Prodi appeared to acknowledge the changes needed if Italy was to adapt to the demands of a single currency.
Now Prodi has become embroiled in a row with Marco Tronchetti Provera, who resigned as chairman of Telecom Italia SpA last week after Prodi objected to plans to split up or sell the company’s wireless operations. Tronchetti Provera remains chairman of Pirelli & C. SpA, the largest investor in the holding company that owns 18 percent of Telecom Italia.
The country will ultimately be the loser from such political interference in corporate decisions — and the euro area will suffer as well. Prodi has dashed hopes of serious change in Italy. Its exit from the euro has never looked more likely.
“What happens in Italy is crucial to the euro area, because of its political and economic significance,” Simon Tilford, head of the business unit at the Centre for European Reform in London, said in a telephone interview. “The cyclical pickup in the European economy has probably been the very worst thing that could happen to Italy because it has emboldened the people who are opposed to reform.”
There is certainly plenty of evidence for that in the telecommunications sector.
Telecom Italia is a substantial company in its industry. With a market value of about 41 billion euros ($52 billion), it is similar in size to France Telecom SA, and bigger than the U.K.’s BT Group Plc. You might think Telecom Italia’s strategy and direction should have been left up to Tronchetti Provera and the rest of the company’s management.
`Surprised and Disturbed’
Last week, Tronchetti Provera came up with a plan to refocus the business on providing broadband Internet connections and selling media content. It will create separate companies for the wireless unit and fixed-line access network, possibly including a sale of the mobile-telecommunications division, or bringing in outside investors.
In most countries, Tronchetti Provera’s proposal would have been a small story on the business pages. In Italy, the prime minister gets involved. Prodi said he was “surprised and disturbed” by the plan. Of course, the unions were up in arms.
Tronchetti Provera had no choice but to resign, making way for Guido Rossi, the 75-year-old former head of the Italian stock market regulator. Yet the row wasn’t settled even by the delivery of the chairman’s head on a platter. On Sept. 18, Angelo Rovati, one of Prodi’s chief economic aides, resigned amid stories in the Italian press that the government aimed to bring Telecom Italia’s fixed-line business back under its control.
Two Lessons
Certainly investors could only look on with bemusement. “This suggests an increasingly interventionist government stance,” Merrill Lynch & Co. said in a note to investors.
There are two lessons to learn from Telecom Italia’s experience with Prodi. One is corporate, the other political.
For investors, Telecom Italia now looks like a mess.
Tronchetti Provera’s plan would have struck most outsiders as sensible. Around the world, telecommunications companies have realized that old-style fixed-line businesses will come under increasing pressure. People can make free calls on the Internet, or they can use their mobile phones.
Against that, providing broadband connections is potentially a huge business, and the traditional telecommunications incumbents have the infrastructure that puts them in the best position to provide that service.
Insiders Make Decisions
Ditching the older, lower-growth units and concentrating on the more dynamic businesses can be considered a good strategy for any industry. Telecommunications should be no exception.
Next, whether or not you agreed with Tronchetti Provera’s strategy, it is clear that the chairman and his managers were in a far better position to judge the direction the company should take than the prime minister.
Telecom Italia belongs to one of the fastest-changing, most fluid industries in the world — and one where there will be big prizes for the companies that make the right calls. Decisions must be made by the insiders who know the issues, not by a group of politicians with only a fleeting knowledge of the business.
Tronchetti Provera remains an influence on Telecom Italia as chairman of Pirelli. The stage is set for more infighting and blood-letting, probably the last thing Telecom Italia needs as it tries to build its future.
Euro Exit
Italy should be concentrating on technology-led, high-value industries such as telecommunications as it attempts to transform its economy. Prodi clearly refuses to accept that.
We can forget about reform of Italy’s ossified economy. The new prime minister would rather go back to the old-style deals between government, unions and big business. Yet without genuine moves toward a more flexible, open economy, it is impossible for Italy to remain in the euro.
Only Italy can lose in the battle between Prodi and Tronchetti Provera — and the rest of Europe will suffer as well.
Source- http://quote.bloomberg.com
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