Telenor’s Danish strategy is in tatters. Telenor’s 4 to 3 consolidation attempt was blocked by the European Commission while its ‘me too’ strategy has been a failure dragging down its profitability. Can Telenor turn the business around and return to profitability?
Before the planned merger a Danish operator was selling in Denmark a 4G LTE smartphone plan with 100 gigabytes for €39. Ahead of the planned merger the operator slashed the gigabytes down to 20 while keeping the price the same. After the merger was blocked the operator doubled the maximum gigabytes on its smartphone plans by launching a plan that packs 40 gigabytes.
[External article, The Financial Times, subscription required] June 2015
Margrethe Vestager, EU competition commissioner, has thrown down a marker of her intent to curtail consolidation in Europe’s telecoms industry by dismissing suggestions that a wave of big mergers is needed to boost investment. Research from Rewheel, a consultancy, suggests that prices rise sharply following merger approvals, citing the tie-up between Hutchison and Orange in Austria. However, telecoms executives retort that price rises tend to be matched by an increase in data capacity or improved services.
While in the neighbouring Swedish 4 operator competitive market gigabyte allowances doubled for same prices (40, 50 and 100 gigabyte smartphone plans are now available and on some Swedish networks 30% of the residential smartphone customers are now on the 20, 50 or 100 gigabyte plans) in Denmark two operators started moving in the opposite direction.
Unlike all other vertically price discriminated telco mobile TV and film store video services Telenor’s service is not zero-rated but the price is massively discounted. Telenor charges 10 times less per Gigabyte when consumers watch its own internet video service over its mobile network compared to the price it charges consumers for open mobile internet access!