Friday, April 1, 2016

As Orange Bid Collapses, France Mobile Market Will Not Consolidate From 4 to 3

For the moment, the French mobile market will continue to be lead by four companies, as the
proposed Orange acquisition of Bouygues has been abandoned, apparently because the government and Bouygues could not agree on all terms and conditions.

The collapse of the proposed 10 billion euro ($11.4 billion) deal probably means the difficult (for mobile operators) retail pricing environment will continue.

Regulators globally disagree about the minimum number of suppliers required to maintain vigorous competition in any mobile market. French regulators traditionally have emphasized “competition,” but seem to have shifted views, now arguing that consolidation would be better, long term, as it would enable more investment in next generation networks.

French regulators seem to be comfortable with three providers. European Commission regulators seem to prefer four.

In a direct sense, those views lean one way or the other on a key question: what is better, lower prices for consumers or stronger firms able to invest more?

French regulators seem to believe investment now is the bigger issue, so three providers is better, as fewer competitors likely means higher prices, and therefore more ability to invest in next-generation networks.

EC regulators seem more focused on the traditional concern, namely lower prices for consumers, at the risk of less investment.

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