Little chance of 4-to-3 merger in Swedish telecoms market

There is little chance of a merger that would cut the number of mobile operators in Sweden from four to three, according to market leader Telia’s new CEO Allison Kirkby, who did a similar deal in the Netherlands in an earlier job.

The Scottish restructuring specialist, who took charge at Telia this year and previously ran Tele2 , has acted swiftly to shed overseas assets and refocus Telia as a Nordic regional player.

At Tele2, Kirkby pulled off the sale of its struggling Dutch subsidiary to Germany’s Deutsche Telekom in a so-called four-to-three deal that passed muster with EU competition regulators.

Similar consolidation in Sweden was unlikely, she told the Morgan Stanley Technology, Media and Telecom Conference on Thursday, because the weakest market player is stronger than was the case with Tele2 in the Netherlands.

“I see limited opportunity for further consolidation in Sweden at the retail end,” Kirkby said.

The risk in any merger would be the imposition of remedies requiring the creation of a new fourth player to preserve competition: “Better the devil you know,” she added.

With many European telecoms operators reporting stagnant mobile service revenues, one of the few ways for the industry to lift margins is to seek consolidation.

Turning to Denmark, Kirkby said there were “far too many brands and players” but there, too, she saw little potential for a four-to-three deal involving Telia’s local unit whose market position she described as “our weakest”.

Kirkby said the wider telecoms space in Denmark, including new entrants into fibre-optic networks, was more dynamic. “I am looking at how do I take advantage of the many moving parts and how that will play out in the coming years,” she said. Reuters