In Business Model, Internet Access, Mobile

Mobile service provider mergers that reduce the number of leading operators from four to three lead to increasing consumer prices, despite the typical claims that such consolidation will lead to stronger competitors more able to do combat with the market leaders.

The U.S. Federal Trade Commission, for example, points out that horizontal mergers allow the merged firms to raise prices.  

That was the case in Denmark, argues analyst John Strand, of Strand Consult, where even proponents of failed mergers have noted that prices would go higher in the aftermath of merger approvals.

One might simply note that financial analysts virtually always favor such consolidation primarily because removing a competitor from the mobile market leads to pricing power, which boosts revenues and profits. In other words, there always is a danger of higher consumer prices when horizontal mergers occur.

That is what one should expect, as less competition tends to mean less need to compete on price or other service and product attributes.

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