Economic Development looking to bypass regulator for telecoms acquisition

Tuesday 20 June 2023

Guernsey’s Competition Law could be temporarily suspended to allow Sure to acquire Airtel without official oversight from the Guernsey Competition and Regulatory Authority (GCRA).

In a media statement the States of Guernsey said: “Guernsey’s Competition Law includes a mechanism that makes it possible for the States to agree to make a specific and time-limited exemption, as it recognises that there may be occasions when the Guernsey Competition and Regulatory Authority (GCRA) has concerns from a competition perspective, but when there are compelling wider benefits which mean the government might enable a transaction to take place."

The Committee for Economic Development has published a Policy Letter asking approval from the Assembly to trigger the time-limited exemption, after Sure asked the States of Guernsey to review the proposed transaction.

Both ED and Sure say there are several “significant benefits” to the island, including; £30million investment in a new core network, a binding commitment to establishing 5G, and fewer mobile tower sites.

The decision to suspend Guernsey’s Competition Law has been taken after consultation with the GCRA. The Authority advised on a number of binding commitments by Sure to address any negative impact on consumers.

The President of the Committee for Economic Development, Deputy Neil Inder, said the acquisition will see Airtel exiting the market in an “orderly way”.

“Sure’s plans included potential investment worth tens of millions of pounds in infrastructure to improve network quality and services and subject to States agreement and GCRA licensing in the future, to introduce a 5G network,” he said.

“This creates binding commitments on that investment, while meeting telecoms security standards faster, and while also reducing the number of mobile towers compared to what we have now.

“If the States approves the exemption, it will mean that Airtel exits the market in an orderly way with consumer protection and competition conditions in place. The commitments from Sure secure the best possible outcomes for consumers and guarantees large-scale investment in Guernsey."

Pictured: “The Competition Law includes a mechanism for the States to provide an exemption exactly for this kind of scenario, where the wider economic benefits outweigh any concerns around the impact on competition within the market,” said Deputy Inder.

Sure has made a raft of promises that’ll be built into its licence with the GCRA.

These promises include a commitment to retaining Airtel’s Base plan for at least 36 months after the acquisition, and for the telecom provider to relinquish spectrum to make sure it doesn’t have an unfair advantage over any future competition.

“The level of potential investment in 5G, alongside the fibre network being rolled out right now, will benefit the island’s economy for the next decade and beyond with greater reliability and gigabit speeds for all,” said Sure Group CEO, Alistair Beak.

“Consumers will not only benefit from gigabit networks, if the acquisition is approved, but also from a series of legally binding promises that commit Sure to provide great value, improved services and security, and facilitate fair competition.”

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Pictured: Mr Beak, CEO of Sure Group.

The telecom provider said if the transaction is approved “Sure will invest up to £37million in Guernsey”.

Economic Development reached out to the GCRA for technical comment twice before deciding to push ahead with the development of a Policy Letter seeking the exemption.

While technical consultation has been sought, the Committee doesn’t need the blessing of the GCRA to apply for an exemption and could do so even if the GCRA disagreed with acquisition.

The acquisition also needs regulatory approval in Jersey, where the Jersey Competition Regulatory Authority (JCRA) is still being used.

In its first review of the proposed sale, the JCRA identified some ways that the deal could damage competition in the retail mobile market, including the risk that JT and the combined entity could unilaterally raise prices or reduce the quality of their services.

Sarah Price, Chief Operating Officer at the JCRA, said: “Mergers and acquisitions can bring many benefits to an economy, introducing new management skills and investment, and in many cases, improvements in efficiency through economies of scope and scale.

"However, they may also lessen competition and it is therefore appropriate that we thoroughly investigate and consider all of the factors, including the market before merger and the likely impact post-merger."

The JCRA can approve or reject the deal but it also has the right to permit it with conditions.

The JCRA is now the second stage of public consultation.

Guernsey-headquartered Sure is ultimately owned by Bahrain Telecommunications Company, while Airtel is owned by the New Dehli-based Bharti corporation.