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Telecoms operator Sure's proposed purchase of Airtel-Vodafone appears to be in trouble after Jersey's watchdog found the move could lead to a "substantial lessening of competition".
Last autumn, Sure said it had reached an agreement with Airtel’s parent company, Bharti Global Ltd, in a deal which would result in an almost £50 million investment in a new 5G mobile network.
As any merging of the companies would affect both Jersey and Guernsey, each island has considered the matter separately.
Members of Guernsey's Economic Development Committee had already said they would support suspending the island's competition law temporarily to allow the deal to go ahead.
However, on Tuesday, Guernsey politicians appeared to make a U-turn following what they described as "developments in Jersey".
Yesterday afternoon, those "developments" were crystallised in the form of a provisional finding from the Jersey Competition and Regulatory Authority (JCRA), which had market-tested proposed commitments by Sure with competitors, customers and suppliers of the two firms and considered submissions from the two firms.
In a report, the JCRA said:
Airtel has a substantial share of Jersey’s retail mobile market and remains an effective competitor.
The proposed transaction would lead to further concentration in the market… leaving consumers with only one alternative supplier in the event that the merged company raised prices or reduced the quality of its service.
New entrants to the market were ‘unlikely’ – there have not been any for three years. And there was "generally no significant buyer power among consumers which would be sufficient to impose a meaningful competitive pressure on the merged entity and JT".
The customer benefits cited by Sure and Airtel would "not be sufficient to offset a potential substantial lessening of competition".
Sure’s commitments "do not sufficiently allay the competition concerns arising from the proposed transaction", or "create or enhance any customer benefits" arising from the planned merger to "outweigh the expected loss of competition".
Interested parties are now being invited to make submissions by no later than next Wednesday.
In a statement, Sure’s group chief executive Alistair Beak said he was optimistic that the proposed acquisition could still go ahead.
"We are unchanged in our belief that this deal is vital for a long-term, sustainable, competitive telecoms market and are committed to provide good value to customers.
"We are optimistic that the process in Jersey will be resolved positively."
Pictured: Mr Beak, CEO of Sure Group.
He added: "Our ambition is to futureproof Jersey, provide stronger competition as a challenger brand, and keep our islands connected at the forefront of global technology.
"Sure is known for providing high-quality services at great value, and this transaction, if approved, would enhance our ability to compete in both aspects."
Sure said it intended to review the JCRA’s findings in full and would engage fully with the regulator to find a "positive resolution to enable the transaction to proceed".
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Status of Sure-Airtel acquisition in Guernsey unclear as Jersey moves forward
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