Merger Simulations in the Mobile Industry: Methods and Applications

The telecommunications sector plays a key role in the development of a country’s economy, especially in an era of complete digitization. Today more than ever, after experiencing the lockdown caused by Covid, we became aware of the importance of these services. The enabling and facilitation of the connection between individuals has gone from being a service to offer trying to minimize the expenses associated with it, to being a key asset to be developed with a view to future progress. In fact, in order to keep up with technological development, the main market players have realized that they must necessarily invest large amounts of money in the network infrastructure. Also for this reason, in recent years there has been a consolidation of the market witnessed by a large number of requests for mergers and acquisitions in Europe and worldwide. The main regulators have therefore had to work hard to try to avoid possible damage to the collective well-being, analyzing in detail a large number of cases. Studies carried out in recent years have shown that most of the estimates made during the assessment of the merger show a possible general increase in prices, resulting in a reduction in welfare, which is why, often, mergers are only approved by introducing protective measures. Moreover, reanalyzing the same cases several years after the realization of the fusion, comes confirmed like, in the majority of the situations, this leads to having a negative impact on competition. The role of the institutions in trying to protect these effects is therefore fundamental. This task is extremely delicate, since the rules and conditions imposed must be able to preserve the continuous technological development of the sector, without hindering innovation. Trying to put ourselves in the role of the regulator, we tried to analyze the Thai case of real merger, which occurred recently. Using the necessary approximations, it emerged that the merger could lead to an increase in prices, but that the latter is not critical for the overall wellness. However, it should be noted that it is extremely complex to obtain perfectly reliable results only using quantitative estimates since the variables to be considered are many. For this reason, the analysis carried out suggests only a potential scenario and should therefore be seen as a useful support in the decision-making process.