EU: Telecoms companies call on Brussels to reconsider merger policy

The European Commission should help telecoms companies whose revenues it has eroded through consumer-friendly regulation by allowing more mergers to help them to build scale and boost investment, the CEOs of Vodafone and Orange said on Tuesday.

European regulators are still underestimating how the present framework hinders the capacity of telecoms operators to sustain investment, unlike the regulatory landscape enjoyed by their US peers, the carriers argue.

The companies also point to the looming loss of revenue from a deal clinched by European lawmakers this month to pave the way for the abolition of roaming fees in June.

However, the competition regulator rejects the industry’s arguments that mergers are necessary to enable big new investments in mobile broadband networks, saying that effective competition is the main driver for investment.

“I would be very pleased… to see the European Union change slightly the way it sees our industry, not only through the consumer’s eyes but realising that there are other challenges, especially the investment,” Orange CEO Stephane Richard told a panel discussion at the Mobile World Congress trade fair in Barcelona.

“Obviously, it is easier for a company to get some return out of huge investments that we have to make in the networks when we have the credible size. It’s so obvious.”

The European Commission last year blocked Hutchison’s 10 billion pound ($12.4 billion) bid to buy O2 UK from Telefonica, saying it would have led to higher UK prices by leaving only two other network operators.

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