Three into two don’t go

The telecommunications market is a crucial pillar of the Maltese economy and is tightly regulated by the Malta Communications Authority. With the proposed takeover of Vodafone Malta by Melita, the sector could be set for significant change. spoke to STEFA

tions or mergers which reduced the number of operators to fewer than three. Where acquisitions or mergers from four to three were approved, they have done so only if the parties agreed to submit to stringent conditions and guarantees.

The approval of Melita’s acquisition of Vodafone would be exceptional by EU standards. The OFC is currently undertaking a detailed second phase investigation, where we expect that all interested parties including operators and consumer groups will be very actively engaged. It is a complex and delicate situation but not impossible to resolve and GO has confidence in the OFC’s ability to manage the process equitably.

You mention that the OFC is undertaking a detailed second phase investigation of the proposed takeover. What does this entail?

Such investigations are launched when the competition authority has serious prima facie concerns about restricting competition. The OFC has about four months to look in-depth into these competition concerns and how, if at all, they can be addressed by appropriate remedies. Interested third parties, such as GO, the MCA and the Consumers’ Association, would typically be consulted about their concerns. So far, we have not received requests for information from the OFC.

Both Melita and Vodafone are making the point that by joining forces they will be better able to invest and so offer more choice to customers. How do you respond to that?

In fact, Melita is a market leader in fixed internet and pay-TV services while Vodafone is a market leader in mobile. That covers all the main consumer areas. Combining the two in fact puts at risk their competitors’ ability to compete in the consumer segment, because it would create a super dominant player. In competition, dominance denotes a position where one can behave independently of its customers, competitors and ultimately the consumer. That would spell bad news for competition dynamics in Malta.

Secondly, we do not accept the argument that Melita and Vodafone do not have the resources as separate entities to invest in new products and technologies. Vodafone is claiming to have launched 4G+ and Melita has launched quad play products and is claiming to have launched Gigabit speed fixed internet. So clearly they do have the resources to invest and compete. Let’s also remember that Melita started as a cable TV company and has successfully transformed itself into a quad play communications business. Let us remember where GO started off. It did not have a mobile network, but invested and built one. It also did not have a TV network but invest- ed there as well. It would have been too easy for GO to argue that it could not invest on its own, but instead it has built the business from nothing and has been able to earn the trust of the consumer and is now a significant player. Melita and Vodafone should be able to do likewise. The point I am making is that Malta has developed a competitive and advanced telecommunications market because operators have invested, and are still investing, in developing new infrastructure and products. There is no apparent reason for this successful model not to continue.

Apart from the Melita acquisition of Vodafone, what are the other major developments affecting the telecoms industry in Malta?

Clearly, the market is focussed on delivering more and faster data to customers both on fixed line and mobile. As I’ve mentioned, Melita are already talking about gigabit speed fixed internet and Vodafone are talking about 4G+. Obviously our competitors are trying to obtain first mover advantage but I think it would be fair to question the infrastructure on which these claims are being made. It’s also important that the regulators put the competitive framework for new services properly in place before we rush into new launches. On 4G+ for example, GO is ready to launch the service in all high demand areas nationwide but we will do this only when the Malta Communications Authority actually allocates commercial frequencies for this service. On fixed internet, GO continues to roll out fibre to the home, which has now passed more than 50,000 homes.

Are there any more possibilities of more growth for this industry in Malta?

So far, all three operators have been registering growth and profit. If a problem of growth exists in Malta, it would exist with or without a takeover, and the latter would not change anything much.

Of course Malta is a small market and opportunities are not as large as elsewhere. Yet, we are still positive about opportunities but are aware that they do not fall in your lap.