Swiss regulator blocks France Telecom's €1.5 billion TDC merger

The Swiss regulator yesterday blocked a planned merger of France Telecom's Orange and Danish-owned telecoms firm TDC's Sunrise on the ground that the merger would create a ''dominant position'' and reduce consumer choice.

Switzerland's regulator, The Competition Commission (COMCO) blocked the merger since it would have created a dominant player in the mobile telephone market alongside top Swiss telecoms provider Swisscom, leaving the country with just two operators.

Paris-based France Telecom, the third-largest telecom operator in Europe and one of the largest in the world, had agreed in November 2009 to merge its Swiss operations with Denmark's TDC's Swiss arm Sunrise, by paying €1.5 billion to TDC, with France Telecom holding 75 per cent stake in the combined entity, and TDC holding the remaining 25 per cent.

The merger would have created a company with €2 billion in revenues and approximately 3.4 million mobile and 1.1 million fixed and broadband subscribers, accounting for 38 per cent of the mobile telephony market and 13 per cent of the fixed broadband connections in Switzerland.

But the rejection by COMCO has come as a huge surprise for analysts since the country's largest telecom operator Swisscom, controlled by the Swiss government, has a 62-per cent market share of the mobile telephony market, 24 per cent less that the proposed merger of France Telecom and Sunrise.

The European telecom market is already on a consolidation drive with the UK regulator having approved the merger of France Telecom and Deutsche Telekom late last year. (See: Deutsche Telekom and France Telecom UK arms to merge)