Operator now has its first low-cost operator brand since shuttering Telfort four years ago
After announcing it would acquire the Dutch operations of budget MVNO Youfone for around €200m last June, KPN has finally received the “all-clear” from the Netherlands Authority for Consumers and Markets (ACM).
Last September, the ACM announced it needed to investigate the acquisition further, suggesting it may worsen competition in the no frills segment of the mobile telecommunications services market. Specifically, the regulator pointed out that Youfone does not have its own network and uses KPN’s mobile network but could also use the Odido or VodafoneZiggo network. This may, the regulator postulated, may have strengthened Youfone’s position in negotiations with KPN about the use of the network and contribute to Youfone’s ability to compete competitively on price.
In its latest ruling the ACM said its research found that competition will not decrease because of the takeover because no important competitive force will be lost and there are sufficient other providers that continue to exert competitive pressure.
“Consumers will continue to have sufficient choice after the takeover. In addition to Youfone, there are several providers that offer competitively priced mobile phone subscriptions. Moreover, economic research shows that prices for consumers are not expected to change significantly. An economic analysis estimates the price effect of the takeover between -0.4 and 0.7 percent. Therefore, no negative effects are expected from the Youfone takeover,” stated the ACM.
The regulator also concluded that the acquisition had no significant effect on the incentive for KPN to allow other MVNOs onto its network. ACM’s research did show that there are significant switching barriers for MVNOs and that they have not switched in the past 10 years. “Nevertheless, it appears that they can effectively threaten to switch to another network, such as Odido or VodafoneZiggo. This threat ensures that MVNOs can negotiate better conditions with KPN,” stated the ACM.
The MVNO is already running on KPN’s network and boasts more than 580k fixed and mobile customers in the Netherlands. Around 90% of Youfone’s customers are mobile and the rest take fixed services. Dutch MVNOs reportedly hold between 10-15% of the mobile market.
Independent operation
In a statement, KPN said with the acquisition approved: “KPN strengthens its position in the mobile and broadband market”.
The operator added: “The commitment for Youfone is to achieve further growth in the coming years by continuing the efficient business model that Youfone has successfully established. The Youfone organization will continue to operate independently within KPN to ensure that current and future Youfone customers are served in the way they are familiar with.”
Youfone will join existing brands XS4ALL, Solcon and the youth-focused Simyo as KPN brands.