Telefónica wants to avoid restrictions on the merger of Orange and Másmóvil in Spain. The transaction is the litmus test for the European competition regulator. “The operation should have minimal ‘remedies’ or directly without ‘remedies'”, said the executive president of Telefónica, José María Álvarez-Pallete, after the presentation of annual results in which they grew in all their markets.
“If one analyzes the impact of the networks with whom it competes and what becomes clear is that the Spanish market is already different”, highlighted Álvarez-Pallete, who has defended that in this new time “a new regulation” is needed. . He says this despite the fact that the future merged entity will have more broadband clients than the group he chairs and would face a much stronger rival with a greater capacity to invest. But he understands that it would hurt him much more if there were demands for the sale of assets that would once again create a fourth, very strong operator in the country.
Álvarez Pallete has remarked that the infrastructure market in Spain is already highly competitive, with three fiber networks to the home deployed by the main operators, and has stressed that the operation will be a ‘test’ to measure whether the European Commission has really understood the changes brought by the new digital world. The Competition Commissioner herself, Margrethe Vestager, already detected last year on a visit to Spain that she would analyze these transactions “in depth”.
Telefónica is no exception. Evidently, the smaller operators, aspiring to obtain a good price for these network assets or the spectrum, want there to be restrictions and regulatory obligations. But the operator that owns Movistar has also been joined in recent months by Vodafone itself, which after failing to close the merger with Másmóvil, understands that it would be much worse for its interests to create a fourth operator with these ‘remedies’ .
The pressure is increasing from the operators before the start of the complete study of the transactions by Brussels. The notification became effective a couple of weeks ago and the ‘road map’ of Orange and Másmóvil calls for a final verdict by Vestager throughout next summer.
Telefónica prefers the ‘lesser evil’ of the merger, with the creation of a stronger rival but without conditions, than a transaction with the sale of assets that would create ‘another Másmóvil’
The use of high speed
On a European level, the manager also held the public consultation promoted by the Commissioner for the Internal Market of the European Commission, Thierry Breton, to determine whether large technologies should pay for the use of the network. He has brought the data to light again: six technology companies, including names such as Netflix or Amazon, generate 60% of the traffic without contributing to the use of the network infrastructures they use.
“This world has changed, it has little to do with the current regulation. As for Spain, I believe that everything must be changed. This is not the old copper network of a monopoly, there are at least three fiber networks in most of regions already deployed”, underlined the manager.
Álvarez-Pallete has called for the end of the regulation that obliges the company to provide wholesale fiber services in various areas. In addition, the CEO of Telefónica, Ángel Vilá and Álvarez Pallete have denounced that the prices fixed by the regulator to access the network and the company’s pipelines are too low.
One of the aspects that will have to be studied by the regulator in Spain is that of the pay television market. Since the purchase of Digital+ in 2015, Telefónica must transfer a series of contents to its rivals in the wholesale market, since that transaction gave it a dominant position in this sector. However, the secretary of the council and head of regulation, Pablo Carvajal, was confident that these “remedies” ended in April without any new ones being imposed.
Thus, it has indicated that, with the arrival of the platforms, Telefónica does not have a dominant position in this market and there are no conditions that could justify an intervention by the National Commission for Markets and Competition (CNMC). The executive president linked the potential entry of an industrial partner to Movistar+ to this absence of regulatory requirements.