While the largest phone companies in Scandinavia are saying that mergers would be advantageous for both the region and corporate earnings, no one is selling, Bloomberg reported. With four main players each in Sweden and Denmark, there are too many carriers for smartphone and tablet users in these markets. Meanwhile, Access Industries Holdings Inc of billionaire Len Blavatnik bought spectrum for a new fourth-generation network, shocking three existing carriers, the report said.
In an interview with Bloomberg, head of Telenor ASA (TEL)'s European unit Kjell-Morten Johnsen said, "It's a crowded market but that doesn't mean anything is going to happen." He said that Telenor or TeliaSonera will not be exiting Sweden and Hutchison Whampoa's Tele2 AB and 3 Scandinavia have not expressed any intention of backing out.
The report said Telenor, TeliaSonera and Tele2 have said that they wanted to remain in their home markets where they have established long histories. Meanwhile, 3 Scandinavia has continued to invest in Europe in its bit to increase its footprint in the region. Profits, however, may continue to come to a standstill in the future as an increase in data use will prompt the need for costly network improvements, the report said.
Johnsen said, "That's just the way it is. It's easy to see why we've been more focused on Asia."
Although more consumers are using mobile devices to look at videos, listen to music and surf the web, the demand is not translating to growth in sales due to declining prices. In the third quarter, the mobile revenue of Sweden-based TeliaSonera dropped. A Bloomberg report on October 17 said sales from the firm's mobile business dropped 2.1% to SEK12.2 billion. Norway's Telenor also experienced a 2.6% drop in sales in Norway to NOK6.27 billion in the third quarter, according to a Bloomberg report on October 31. As competition grows tougher, the companies have been prompted to focus expansion in Asia and Eastern Europe, the report said.
Johnsen said that lowering the carriers in the individual markets from four to three would enable them to save money and allow them benefit from their scale.
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