The CEO of Three Austria is adament. Claims that its 2013 purchase of Orange Austria has undermined competition in the local market are untrue, Jan Trionow says.
Austrian consumers get more for their money in real terms and have better services and infrastructure at their disposal as a direct consequence of the deal, which is being held up in certain quarters as a bellwether for the merger of Three and O2 in the UK, according to the Chief Exec.
“The most often quoted measure of consumer prices, the price index from RTR, has been falling now for five consecutive quarters and that is visible to everybody. So there is no real reason to complain. It has been, and remains, a very competitive market,” Trionow tells European Communications.
According to reports this week by BWB and RTR, the country’s competition and telecoms authorities, Austrian consumers saw prices jump by up to 20 percent on average in the two years following the merger.
RTR estimated smartphone and feature phone users paid up to 90 percent and 50 percent more than in 2011, before the European Commission (EC) approved the takeover of Orange Austria.
Trionow says the BWB and RTR reports show that consolidation works, even if it “might take time to deliver results”.
The rush of MVNOs into the Austrian market last year – a consequence of the terms imposed by the EC in passing the deal, and the basis of renewed competition, according to RTR – should only be considered a single factor in the market’s reinvigoration, the CEO adds.
“There’s been a lot of noise, which hasn’t all been true. Yes, certain components increased in price, but that was a consequence of the tariff structure, where instead of charging extra for roaming or out-of-bundle texts, more value was put into basic packages,” Trionow says.
“It was also the case that, in September 2013, we had the most expensive frequency auction in Europe at the time – per inhabitant and per MHz. That has to be taken into consideration as well. But regardless of these effects, ARPU went down. That’s the reality.”
He adds: “Through its efficiencies, the merger has triggered very intense competition on network quality. Other operators have had to match us, and it has precipitated investment in fixed line networks as well. So the merger has had a very positive impact on competition in terms of both consumer prices and network quality.”
The Austrian case has been cited to derail the parallel acquisition of Telefónica O2 by Three’s parent CK Hutchison in the UK.
The CMA, the UK’s competition authority, published an open letter to the EC this week urging it to reject the merger on the grounds the Austrian example would be repeated in the UK.
In response, CK Hutchison described the CMA’s argument as “entirely one-sided”, and “designed to support a preordained outcome”.
But the current EC competition regime, set to rule on the deal next month, has form.
The proposed merger of Telenor and TeliaSonera in Denmark was struck down following disagreements with the EC last September, a collapse considered to herald a tougher stance by Brussels on market consolidation.
Commentators have suggested the EC prefers remedies that bring new entrants, rather than in-market consolidation, as with Orange’s purchase of Jazztel in Spain last year.
This is an extract from an in-depth interview with Jan Trionow that will appear in the Q2 issue of European Communications magazine, due out next month. Click here to subscribe.