Rare European telco consolidation as T-Mobile Netherlands moves to acquire Tele2

T-Mobile Netherlands is bidding €190 million plus a quarter of the combined company to buy rival Tele2.

While this is an interesting piece of potential disruption in the Dutch market, the real intrigue lies in the position this puts European competition authorities in. According to Ovum’s WCIS service KPN is the dominant Dutch operator with a 55% subscriber share. Vodafone is second with 22%, then comes T-Mobile with 17% and Tele2 with 5%.

Combining the latter two would still only achieve parity with Vodafone and be miles short of KPN, so it’s hard to see what possible objections there can be to this deal on competition grounds. But Eurocrats have consistently shown themselves to be almost religiously inclined towards maintaining the number of operator players in a given market at four, so they’re left with a bit of a dilemma over this one.

As you would expect T-Mobile is acutely aware of this regulatory dogma and is wasting no time in telling anyone who will listen how uncompetitive the Dutch market is and thus, by extension, what a great idea this acquisition is.

“I would like to congratulate all our customers and all others who are looking for attractive alternatives,” said Søren Abildgaard, CEO of T-Mobile. “This combination means justice for customers. This duo has been getting away with this game for far too long and there was only one victim, namely the customer! No more. No longer. We will be able to compete against the duopoly much more efficiently and give all Dutch customers a fair choice. We are never going to stop breaking down barriers and will continue to challenge this industry in the years to come.”

Abildgaard seems to have been talking to his colleague in the US – John Legere – who has turned bombastic disruption into an art form over in the US, and he’s not the only one. “We’ve started our journey to disrupt the Dutch market and we will be creating a viable and strong attacker of the duopoly KPN and VodafoneZiggo.” said Thorsten Langheim, Head of the Group Development segment of Deutsche Telekom overseeing T-Mobile NL.

“This is a fantastic opportunity to speed up development of the Dutch telco market and to spur effective competition to the benefit of the Dutch population,” said Allison Kirkby, President and CEO of Tele2 AB. “I see this as a logical next step to become part of a stronger number three player that will benefit our customers, our shareholders and our employees.”

T-Mobile is hoping this deal will close on the second half of next year, but that seems optimistic on two counts. The first is the strong possibility that Europe will just say ‘four good, three bad’ and then stick it’s fingers in its ears. The second is that it will take a year just to start mulling the whole thing over because massive, publicly-funded lunches don’t eat themselves. Let’s see.