The EU is failing to support large telecoms firms, says one of Vodafone’s senior directors, adding that Brussels isn’t the prime target for blame.
The European Union’s failure to support international telecoms growth is hindering economic expansion, Vodafone’s head of EU affairs has said.
The comments come at a time when UK-headquartered Vodafone is finalising a merger of its domestic business with Three UK, a deal approved by the British competition regulator in December.
“When we talk about scale, we want to see a level of ambition”, said Darren Ennis, speaking at the EU-UK Forum annual conference in Brussels on Tuesday.
“Europe too often goes from a defensive, protectionist perspective rather than a proactive, innovation-focused perspective … what we need is a change in the mindset,” he explained.
Distinguishing between Brussels officials and member state representatives, Ennis later clarified that challenges to mergers are mainly emerging from the second camp.
Solutions, he pointed out, are being correctly identified – only to be rejected by national delegates.
“We get a wonderful set of conclusions which support Draghi and Letta”, then “telecom ministers turn up in Brussels and it’s like they’re on another planet”, Ennis said. “Member states need to make that leap.”
Infrastructure investments
The EU has more than 30 mobile network operators, while the US and China have less than a handful each.
One downfall of this structure is that smaller firms make less profit, meaning less funding goes towards infrastructure upgrades.
“EU companies lack the scale required to provide citizens with ubiquitous access to fibre and 5G broadband”, said a recent EU report on competitiveness – written by former Italian Prime Minister Mario Draghi.
Echoing Draghi, Vodafone has argued that barriers to telecoms investment are hindering digitalisation.
In turn, the firm suggests the EU is sabotaging its own economic growth.
Outdated processes slow productivity, noted Vodafone’s recent “Why Telecoms Matters” report, meaning the EU could find itself trailing behind competitors.
Antitrust concerns
While Vodafone is calling for a modernisation of competition rules, some fear that such a move could hurt consumers.
The creation of larger companies would reduce customer choice – meaning prices could rise even while quality deteriorates.
During the past decade, the EU has halted a number of telecoms mergers due to concerns that one player may hold too much power.
Acceptance of a deal often requires the creation of a new competitor.
“We believe that the recent decision in the UK to approve the merger of Vodafone and Three by the CMA and Ofcom could be … a good example of how EU competition policy can change”, Ennis said on Tuesday.
His words reiterated a message also given by Vodafone chief executive Margherita Della Valle on the same day.
“The UK now is making a clearer example of how one can modernise the approach to the telco world”, she said in an earnings call.
The UK’s competition watchdog, the CMA, notably approved the merger after Vodafone agreed to invest billions in 5G infrastructure across the UK.
The firm also agreed to cap prices on some mobile tariffs and data plans.
