Phone firms call on EU to allow mergers to cut costs

European regulators need to allow phone businesses within a country to merge to avoid them being choked by network costs, a top industry group said yesterday.

The call comes before rulings on whether to approve such deals in Germany and Ireland.

Efforts by European Commissioner for the Digital Agenda Neelie Kroes to establish a single telecommunications market across the region don’t address the problem that the roll-out of infrastructure consumes an ever-growing share of operators’ revenue, said Tom Phillips, chief regulatory officer at GSMA, which represents 800 mobile operators globally.

“The most pressing need that we have at the moment in Europe is to eliminate some of the duplicate investment in network infrastructure,” he said.

“That needs to be addressed immediately if investment is to be re-established.”

The call comes weeks before the commission is set to decide on the combinations of Telefonica SA’s German unit with Royal KPN’s E-Plus, and Hutchison Whampoa’s bid to buy Telefonica’s Irish unit, O2.

The decisions may set a blueprint for more in- market consolidation in Europe, which has fallen behind North America and Asia for fast mobile internet access.

Both proposed deals would reduce the number of national wireless network operators to three from four.

Joaquin Almunia, the EU’s antitrust chief, hasn’t been swayed by telecommunications firms’ calls to ease merger rules, saying national markets are “often highly concentrated with only a limited number of network operators” in each EU nation.

He said deals to combine phone operators can’t come at the cost of higher prices for customers.