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European Telcos Call on EU for Loosening of Merger Rules

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The heads of several major European telecoms groups are jointly calling for a review of the EU's competition rules to spur consolidation in the industry.

Although the EU is considered to be keen on cross-border mergers to promote a single-market, it is far less keen on mergers between companies within single countries. Mergers in Germany and Ireland have both been held up by EU concerns.

A letter signed by ten of Europe's largest telecoms firms has been sent to the European Commission's digital commissioner, Neelie Kroes, calling for a review.

The letter, which has been seen by the Financial Times says that regulatory changes are needed given "decreasing revenues and reduced market values compared with operators in the US and Asia", and to "restore [Europe's] global competitiveness".

Most of the major telcos have posted reduced profits in their European markets, and warned of a weak year ahead. In part that is due to the ongoing economic uncertainty in the region, but around of revenue declines posted last year were due to regulatory pressures on companies.

Any relaxing of the regulatory regime would almost certainly lead to higher consumer prices, and that may prove difficult for the EU to accept as it has been on a constant battle to reduce consumer costs -- especially in the area of roaming between EU countries.

It had been recently suggested that the EU would be more welcoming to consolidation in exchange for less resistance to price cuts, but recent EU investigations into mergers would indicate that it has stepped back somewhat from that informal pact with the industry.

The letter also calls for reform to the management of Europe's spectrum, which is needed to broadcast mobile services, as well as clearer rules on privacy and security.

On the web: Financial Times

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Tags: european commission  neelie kroes