[enapace]

After much debate the eu commission has approved the merger of E-Plus and O2 Germany with the following conditions they must divest some spectrum and mobile capacity.

The conditions were expected honestly and unless they have to give up a ton of spectrum they likely got off likely.

[niceguy1966]

Quote:

Originally Posted by enapace

After much debate the eu commission has approved the merger of E-Plus and O2 Germany with the following conditions they must divest some spectrum and mobile capacity.

The conditions were expected honestly and unless they have to give up a ton of spectrum they likely got off likely.

From the version I read, it sounds like more than just spectrum.

It sounded like they will have to support several MVNO services, which probably means Spectrum plus towers, antennas, base stations, power, back-haul and some management systems, etc, etc.

I'm sure they'll find a way to charge for this stuff, but the German regulator will be watching closely as I understand they wanted the deal blocked but was overruled by the EU.

[japaul]

Actually they won't necessarily have to give up spectrum - just offer it either to a new network or one of the MVNOs that will be taking network capacity from them (they might decide not to buy it).

It is similar to the Ireland decision. Basically before they can proceed they have to commit to sell to between 1 - 3 MVNOs a fixed amount of network capacity (it terms of bitstream access, not spectrum or network equipment). Because the MVNO has to pay a fixed amount for the capacity rather than a variable amount based on usage, the thinking is that they will have a big incentive to offer lower prices to fill it as quickly as possible. This keeps downward pressure on prices in the market. Later on the MVNOs have the option to buy some spectrum (if it hasn't already been sold) and so turn themselves into a proper network.

[enapace]

Quote:

Originally Posted by niceguy1966

From the version I read, it sounds like more than just spectrum.

It sounded like they will have to support several MVNO services, which probably means Spectrum plus towers, antennas, base stations, power, back-haul and some management systems, etc, etc.

I'm sure they'll find a way to charge for this stuff, but the German regulator will be watching closely as I understand they wanted the deal blocked but was overruled by the EU.

I did mention they had been told they had to set aside a set amount of capacity. Not sure who they have got as MVNO was talk at one point Liberty Global entering Germany but that has been called off.

Quote:

Originally Posted by japaul

Actually they won't necessarily have to give up spectrum - just offer it either to a new network or one of the MVNOs that will be taking network capacity from them (they might decide not to buy it).

It is similar to the Ireland decision. Basically before they can proceed they have to commit to sell to between 1 - 3 MVNOs a fixed amount of network capacity (it terms of bitstream access, not spectrum or network equipment). Because the MVNO has to pay a fixed amount for the capacity rather than a variable amount based on usage, the thinking is that they will have a big incentive to offer lower prices to fill it as quickly as possible. This keeps downward pressure on prices in the market. Later on the MVNOs have the option to buy some spectrum (if it hasn't already been sold) and so turn themselves into a proper network.

Yeah that's what I heard obviously they need to do what EE did and look at which masts to keep and which masts not to as well. I think they got a pretty good deal out of it honestly could of been far worse. It certainly has set a precedent now that big economic countries as well as small ones like Ireland/Austria can support 3 networks.

Though it might even be hard to find a MVNO who wants to become a MNO wouldn't be cheap to do would have to start of with VoLTE or some sort of deal like BT is going have with EE.

[Aye Up]

Going forward I doubt this will have any impact on the arrangements in blighty. Some members of this forum are obsessed that the same will happen here. As it stands 4 players seems to be the perfect medium.

Though what I do find interesting is where Telefonica has found the money to fund this move given they up to the eye balls in debt?

[enapace]

Quote:

Originally Posted by Aye Up

Going forward I doubt this will have any impact on the arrangements in blighty. Some members of this forum are obsessed that the same will happen here. As it stands 4 players seems to be the perfect medium.

Though what I do find interesting is where Telefonica has found the money to fund this move given they up to the eye balls in debt?

Technically it will be 5 players in the British Wireless Market come next year as BT will be using it's spectrum which will allow it to be called a MNO as well even though they will be using EE for 2G and 3G pretty much what Three did with O2 and 2G. Trials for that begin very soon if anyone is interested. Imagine they will want rollout VoLTE as soon as they could so they wouldn't have to rely on EE as much.

Haha I wonder where they found the money as well they must be over 50 billion in debt at the moment. Maybe down the back of the CEO's Couch.

[japaul]

Quote:

Originally Posted by Aye Up

Going forward I doubt this will have any impact on the arrangements in blighty. Some members of this forum are obsessed that the same will happen here. As it stands 4 players seems to be the perfect medium.

Hardly perfect for the players though. None of them are happy with the current situation here where margins are too low. And the impact of the Germany decision is not that everyone has to go out and copy it but rather it removes what was previously thought to be a barrier i.e. for the big markets at least, 4 main players down to 3 would be blocked on competition grounds. Now we know that is no longer a barrier. Removing one barrier doesn't mean it will happen, it just makes it more likely than before. Ofcom might not want it but it's not their call. For any combination of the UK networks, it would be an EC decision applying EU competition law.

[enapace]

Quote:

Originally Posted by japaul

Hardly perfect for the players though. None of them are happy with the current situation here where margins are too low. And the impact of the Germany decision is not that everyone has to go out and copy it but rather it removes what was previously thought to be a barrier i.e. for the big markets at least, 4 main players down to 3 would be blocked on competition grounds. Now we know that is no longer a barrier. Removing one barrier doesn't mean it will happen, it just makes it more likely than before. Ofcom might not want it but it's not their call. For any combination of the UK networks, it would be an EC decision applying EU competition law.

Haha also kind of shows that O2 might want sell O2 UK even more with them increasing there debt lol.

Completely agree with you though not sure if you interested Orange France have decided they are going be evaluating decision on buying Bouygues been put on a bit of a back burner.

[japaul]

Quote:

Originally Posted by enapace

Haha also kind of shows that O2 might want sell O2 UK even more with them increasing there debt lol.

Their debt doesn't actually cause that much of a problem at the moment. They can service it perfectly well. The previous problems were more to do with the fact that a lot of it was short term and matured at the same time which when mixed with the problems Spanish companies had financing new debt looked a big headache. In actual fact, when it came to refinancing it they never faced much of a problem and Spain looks a bit better for now (although you never know if that will change again).

[japaul]

Quote:

Originally Posted by enapace

Completely agree with you though not sure if you interested Orange France have decided they are going be evaluating decision on buying Bouygues been put on a bit of a back burner.

There has been a bit of (largely unsubstantiated) talk going around over the last couple of days of vodafone + orange. Could just be silly season mind so perhaps ignore (for now).

[enapace]

Quote:

Originally Posted by japaul

There has been a bit of (largely unsubstantiated) talk going around over the last couple of days of vodafone + orange. Could just be silly season mind so perhaps ignore (for now).

Ah I haven't heard of that thanks for information that would certainly be interesting if a partnership of some sort went ahead between the two companies.

[Aye Up]

Quote:

Originally Posted by enapace

Technically it will be 5 players in the British Wireless Market come next year as BT will be using it's spectrum which will allow it to be called a MNO as well even though they will be using EE for 2G and 3G pretty much what Three did with O2 and 2G. Trials for that begin very soon if anyone is interested. Imagine they will want rollout VoLTE as soon as they could so they wouldn't have to rely on EE as much.

Haha I wonder where they found the money as well they must be over 50 billion in debt at the moment. Maybe down the back of the CEO's Couch.

BT's proposition is certainly an interesting one, I have put my name forward for the trial hopefully I get in. Though they have over 5 million broadband customers and thus 5 million Home Hubs...I do wonder how expensive the rollout will be for them.

Regarding the agreement with EE I understand it to be a fixed, unlike some other MNVOs where its based on usage. BT seems to be waving its willy around with that lovely chunk of prime 2600 they got.

Telefonica is playing this rather strange....I suppose given O2 UK is easily their prize asset they wouldn't want to put it at risk.

Quote:

Originally Posted by japaul

Hardly perfect for the players though. None of them are happy with the current situation here where margins are too low. And the impact of the Germany decision is not that everyone has to go out and copy it but rather it removes what was previously thought to be a barrier i.e. for the big markets at least, 4 main players down to 3 would be blocked on competition grounds. Now we know that is no longer a barrier. Removing one barrier doesn't mean it will happen, it just makes it more likely than before. Ofcom might not want it but it's not their call. For any combination of the UK networks, it would be an EC decision applying EU competition law.

I would agree with you if margins were thin but they aren't, there has been a substantial increase in monthly costs for people taking up expensive smartphones and 4G. The only phone type where margins are thin is on iPhone related products, everything else the Networks do a bit of willy waving and get massive discounts.

As for any combination of UK networks it isn't necessarily an EC decision, if the merger is largely domestic related they butt out...the only reason they got involved in the EE merger was down to the fact both parent companies were the state incumbents in their home markets. That was a matter of interest at European level, same applied to this recent merger. Telefonica is the largest provider in the Iberian peninsula if I am not mistaken. Them merging and suddenly becoming the largest in Germany is a matter of European interest. For arguements sake say Three want to buy O2 UK, because Three is not the dominant provider (as far I know) in any European market the EC would not get involved it would be left to OFCOM and the Competition and Markets Authority. Most takeovers are left to dormestic regulators as it doesn't affect European competiton.

The Commission is not the final arbiter for mergers in any country, they get involved in a limited set of circumstances.

[japaul]

Quote:

Originally Posted by Aye Up

I would agree with you if margins were thin but they aren't, there has been a substantial increase in monthly costs for people taking up expensive smartphones and 4G. The only phone type where margins are thin is on iPhone related products, everything else the Networks do a bit of willy waving and get massive discounts.

For a long time, relative to the others the UK has been one of the most competitive mobile markets in Europe with lower prices and consequently lower margins for the operators than most comparable markets. Whilst prices have started to fall and competition increase in other countries, it is a more recent thing. The factors you mention apply to all countries but when it's all added up, margins in the UK have mostly been far lower than other comparable countries. Why do you think that is if it's not due to a more competitive environment?

Quote:

As for any combination of UK networks it isn't necessarily an EC decision, if the merger is largely domestic related they butt out...the only reason they got involved in the EE merger was down to the fact both parent companies were the state incumbents in their home markets. That was a matter of interest at European level, same applied to this recent merger. Telefonica is the largest provider in the Iberian peninsula if I am not mistaken. Them merging and suddenly becoming the largest in Germany is a matter of European interest. For arguements sake say Three want to buy O2 UK, because Three is not the dominant provider (as far I know) in any European market the EC would not get involved it would be left to OFCOM and the Competition and Markets Authority. Most takeovers are left to dormestic regulators as it doesn't affect European competiton.

The Commission is not the final arbiter for mergers in any country, they get involved in a limited set of circumstances.

Sorry but that is wrong. The Commission would rule on mergers where there are cross border aspects (and can be referred to them even if they don't initially take it on). You say 3UK + O2 UK wouldn't involve the EC. But that's exactly what happened in Ireland where the EC was the decision maker on Three buying O2 there. Comreg, the Irish regulator even said they weren't happy with all aspects of the decison but accepted the EC was the correct authority for it.

You can't have a UK network combination without a European cross border impact. e.g. Say I'm a network in France and I want to offer my customers roaming in the UK access. Currently I can negotiate and play off Vodafone, O2, Three, or EE to get the best deal. If Three bought O2 then I'm weaker as I now only have 3 choices and so probably won't get as good a deal. If this was ruled by a UK regulator then they probably wouldn't consider the impact on the French network. Therefore it gets ruled on by the EC to properly consider cross border aspects of which there would be a multitude to consider.

[japaul]

Quote:

Originally Posted by enapace

Ah I haven't heard of that thanks for information that would certainly be interesting if a partnership of some sort went ahead between the two companies.

Think it was more along the lines of vodafone buying orange. Not sure where that would leave EE or what the French Government would think. In actual fact there isn't too much overlap between them (Spain, Romania, UK perhaps...).

[enapace]

Quote:

Originally Posted by japaul

Think it was more along the lines of vodafone buying orange. Not sure where that would leave EE or what the French Government would think. In actual fact there isn't too much overlap between them (Spain, Romania, UK perhaps...).

True enough Orange have a lot Asian and African partnerships as well as European so might not be a bad idea. Likely might struggle in Spain but doubt would struggle in UK as long as they said they would sell the stake in EE. Vodafone got out of France a while ago . Major Vodafone markets are UK Germany Spain and Italy I would say in terms of European at least. Orange is Spain UK France Poland.

[Aye Up]

Quote:

Originally Posted by japaul

For a long time, relative to the others the UK has been one of the most competitive mobile markets in Europe with lower prices and consequently lower margins for the operators than most comparable markets. Whilst prices have started to fall and competition increase in other countries, it is a more recent thing. The factors you mention apply to all countries but when it's all added up, margins in the UK have mostly been far lower than other comparable countries. Why do you think that is if it's not due to a more competitive environment?


Sorry but that is wrong. The Commission would rule on mergers where there are cross border aspects (and can be referred to them even if they don't initially take it on). You say 3UK + O2 UK wouldn't involve the EC. But that's exactly what happened in Ireland where the EC was the decision maker on Three buying O2 there. Comreg, the Irish regulator even said they weren't happy with all aspects of the decison but accepted the EC was the correct authority for it.

You can't have a UK network combination without a European cross border impact. e.g. Say I'm a network in France and I want to offer my customers roaming in the UK access. Currently I can negotiate and play off Vodafone, O2, Three, or EE to get the best deal. If Three bought O2 then I'm weaker as I now only have 3 choices and so probably won't get as good a deal. If this was ruled by a UK regulator then they probably wouldn't consider the impact on the French network. Therefore it gets ruled on by the EC to properly consider cross border aspects of which there would be a multitude to consider.

My apologies, I stand corrected, I didn't think of it from that perspective hence my somewhat narrow minded view point.