Setback for network sharing as EU opposes Czech deal

Margrethe Vestager.jpg

The European Commission has come out against a proposed network sharing agreement by O2 and T-Mobile in the Czech Republic, along with network infrastructure company Cetin.

The Commission, the executive arm of the 28-nation European Union (EU), said its preliminary view was “that their network sharing agreement restricts competition in breach of EU antitrust rules”.

T-Mobile in the Czech Republic is owned by Deutsche Telekom, but six years ago Telefónica sold its controlling stake in O2 in the country to privately held international financial and investment group PPF, which in 2015 split it into two, mobile service provide O2 and infrastructure and wholesale network company Česká telekomunikační infrastruktura (Czech Telecoms Infrastructure, Cetin).

One neutral commentator called Cetin “the deepest and most progressive infrastructure share in the world: they share everything: passive, active, core network”.

Cetin’s 2G, 3G and 4G networks cover 99.6% of the Czech population and the company runs 42,660km of fibre and 20 million km of copper. It transmits voice and data to points of interconnection in mobile and fixed networks, provides call termination and international data line services.

However, EU Commissioner Margrethe Vestager (pictured), in charge of competition policy, said: “Operators sharing networks generally benefits consumers in terms of faster roll out, cost savings and coverage in rural areas. However, when there are signs that co-operative agreements may be harmful to consumers, it is our role to investigate these and ensure that markets indeed remain competitive.”

She said she had concerns that the network sharing agreement between the two major operators “reduces competition in the more densely populated areas of the country”.

T-Mobile in Prague immediately condemned the decision. “T-Mobile strongly opposes the preliminary conclusions of the statement of objections in view of the vast benefits that network sharing has brought to innovation and consumers in the Czech market such as cost synergies, improving network quality and speeding up deployment of next generation networks.”

O2 in Prague said: “We are one of the first in Europe to share networks, and we are confident that we have complied with applicable legal and regulatory rules. Today, network sharing is commonplace in most European countries. We are therefore ready to allay the concerns of the European Commission.”

The company added: “We see the current analysis above all as a substantial input into the debate on setting the conditions for building fifth-generation networks, where sharing will be crucial for all operators in Europe.”

Cetin also stood out against Vestager’s recommendation, saying it “does not agree that the sharing of mobile networks violates EU competition law”. The company said “mobile network sharing is widespread in many EU countries and elsewhere over the globe”, and added: “Network sharing in the Czech Republic has had undisputable benefits in terms of faster mobile internet and better coverage.” The company said it “will continue to diligently defend its rights and trusts that it will disprove the concerns of the European Commission”.

A study by Opensignal last year showed that the Czech Republic has the best network in the world for overall video experience. 

PPF, the company that owns Cetin and O2 Czech Republic, bought Telenor’s operations in Hungary, Bulgaria, Montenegro and Serbia in 2018 for €2.8 billion.

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