Madrid, October 09, 2015 -- According to Moody's Investors Service, the European telecoms
regulatory environment is at an inflection point, as the rating
agency expects the telecom regulator will change its focus to stimulating
investments, reducing the emphasis on lowering prices.
Moody's expects that the future areas of regulatory focus for EU
telecoms such as harmonising spectrum, reducing telecoms regulation
to a level playing field for new entrants and implementing uniform rules
across Europe would all be credit positive for the sector. However,
regulation dictating structural separation, which involves spinning
off the access network from the rest of the business, would be credit
negative for incumbents.
"Europe's telecoms regulator is now aiming to balance its
historical focus of lowering prices for consumers with greater flexibility
for companies so they earn adequate returns on their network investments.
Taking this approach should foster the new investment needed for new technologies
and greater broadband speeds," says Iván Palacios,
a Moody's Vice President - Senior Credit Officer.
However, Moody's also notes that the competition authorities
seem to have toughened their stance when approving in-market consolidation
deals, particularly after the recent withdrawal of a mobile merger
in Denmark because operators were not able to agree acceptable remedies
with the competition authorities. In-market consolidation
allows market players to extract value from scale benefits, achieve
substantial synergies, improve margins and increase cash flows,
which could support investments over time. Decisions by the competition
regulator on pending deals in the UK and Italy will be important to ascertain
the likelihood of further mobile mergers. A lack of consolidation
would postpone the market repair benefits in other four player markets
waiting to see consolidation, such as Spain, France,
Poland, the Netherlands and Sweden.
"While European telecoms regulation is only likely to start having
positive implications for the sector in the next two to five years,
decisions made by the competition authorities on proposed mergers will
have more near-term impact on affected companies' credit
profiles", added Mr Palacios.
Moody's report titled "Telecommunications -- Europe:
Regulatory Support For Investment is Growing, But Consolidation
Approvals Less Certain" is now available on www.moodys.com.
Moody's subscribers can access this report via the link provided at the
end of this press release.
Subscribers can access the report via this link: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_1006595
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Ivan Palacios
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Espana, S.A.
Calle Principe de Vergara, 131, 6 Planta
Madrid 28002
Spain
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MD - Corporate Finance
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Releasing Office:
Moody's Investors Service Espana, S.A.
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