Tele2 has blamed regulator Ofcom for its decision to pull out of the UK market.
The company's CFO, Hakan Zadler, expressed his irritation on the news that Tele2 was selling all its UK operations to Carphone Warehouse for £8.7 million. "It's important that you have a local regulator to push the incumbents," Zadler said, "and from that perspective it's taken longer in the UK compared to other countries."
Zadler was, of course, referring to the eternal battle between Ofcom and BT - a relationship that had drawn the ire of the telecommunications market for a decade.
Tele2 CEO Lars-Johan Jarnheimer reiterated the same point: "The decision to divest our UK and Ireland operations has not been taken lightly... the way the market for alternative operators in the UK and in Ireland looks today, we can get significantly better returns by reallocating its budget to other markets."
Ofcom isn't acting as fast as it could in ensuring operators are opening their networks to competitors like Tele2, or ensuring that wholesale rates are fair, said Gartner analyst Katja Ruud. But there are other factors for Tele2 in the UK, she added.
"Tele2 was also very late to the market in the UK, which is littered with competitors on the fixed voice side," Ruud said. "They would have struggled from the beginning." Tele2 has a very strict business model and will exit markets if its goals aren't met, she said. Earlier this year Tele2 pulled out of Finland.
The decision to sell its businesses in the UK and Ireland began several months ago when Tele2 considered entering the broadband market in the UK, Zadler said. "Our view was that we needed to do something in broadband otherwise it would not be worth continuing operations there," he said. "When we looked at the cost for that and also again having our view on the competition in the UK and the deregulation process, we didn't think it was worth it."
Carphone Warehouse already offers fixed-line voice services in the UK and is essentially buying Tele2's customers. "Carphone Warehouse has a longer presence and they are much more of a household name," Ruud said.
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