Denmark's TDC joins call for mergers in Nordic market
The largest wireless operator in Denmark has joined the call of their Nordic rivals to combine as market saturation has led to declining prices. Consequently, the fall in prices have placed a dent on earnings and hampered the operators' capacity to invest.
In an interview with Bloomberg last week, TDC Chief Executive Officer Carsten Dilling said, "The Nordic market is mature and ready for consolidation, and we are open minded on the TDC side to assess relevant opportunities. I definitely think we'll see consolidation."
TDC currently leads in the wireless market in Denmark, with Sweden-based TeliaSonera and Norway-based Telenor and 3 Scandinavia following its heels. Dilling said his company is not intent to compete with its rivals based on price. Rather it aims to become profitable by offering a bundled service for mobile, Internet and TV.
Dilling said that TDC decided to focus on profitability last year instead of getting more customers in the country with a population of 5.6 million people. Compared to the 5% decline experienced last year, TDC's earnings before interest, taxes, depreciation and amortization in each quarter for 2013 have dropped less. Meanwhile, shares of the telecommunications firm have increased 23% this year, putting its market value to USD 7.3 billion. Its rivals, Telia Sonera and Telenor, have a market value of USD 35 billion each as they have been more aggressive in overseas expansion, Bloomberg reported.
Oslo-based DNB ASA analyst Fredrik Thoresen told Bloomberg that the charge for mobile data in Denmark has dropped as the country's four national operators try to get new customers. He said this has made it more challenging for them to invest in networks. He added, "The shift from voice and messaging to data has picked up in pace and is likely to yield more pressure on network infrastructure spending, and put greater stress on cash flow margins down the road. The Danish market is ripe for consolidation."