* EU's Ansip sides with Vestager in debate on telco M&A
* EU competition regulators seen taking a harder line
* Danish merger deal abandoned last month due to opposition (Adds investor comments)
By Julia Fioretti and Leila Abboud
BRUSSELS, Oct 13 (Reuters) - The European Commission pouredcold water on calls by telecoms companies on Tuesday for a morelenient approach to mergers in the sector, fuelling fears that awave of consolidation in the sector could come to an abruptstop.
The EU's digital chief, Andrus Ansip, said consolidation was"not necessarily the answer" and operators were alreadyinvesting in newer networks without merging.
"Relaxing competition rules is not the answer," Ansip told aconference held by the Financial Times and telecoms lobby ETNO."Industry consolidation is not necessarily the answer either."
Ansip's comments are in line with a harder stance ontelecoms mergers taken by European Competition CommissionerMargrethe Vestager who took office last year.
She recently scuppered a deal between TeliaSonera and Telenor in Denmark over concerns it would lead tohigher prices for consumers, marking the first time such a dealhad been blocked since telecoms companies began an M&A spree twoyears ago.
"Investors are still trying to understand the ramificationsof the Denmark decision," said Henrik Nyblom of SchrodersInvestment Management. "Hearing Mr Ansip today makes meextremely nervous about going to the office in the next fewdays."
Ansip's position came as a surprise to executives in theaudience who thought that the vice-president in charge offostering a digital single market would have been more receptiveto their arguments that consolidation would permit highernetwork investments.
Michael Fries, who heads Europe's biggest cable groupLiberty Global which is buying a mobile operator inBelgium, said that his discussions with Vestager had been"reasonable" so far, but that companies that wanted to mergewould have to offer bigger concessions than in the past.
"Structural solutions rather than theoretical ones seem tobe the order of the day," said Fries, referring to concessionssuch as selling spectrum or parts of networks instead of rentingout capacity to rivals.
Roger Wilkinson of Newton Investment Management said Europewas still "in last place globally on attractiveness forinvestment in telcos."
"I've heard some things today that cause concern," he said."I'm flabbergasted by the Danish decision -- simply just don'tunderstand it."
EXECUTIVES' PLEA
The chief executives of 10 companies -- Deutsche Telekom, Orange, Telefonica, TelecomItalia , KPN, TeliaSonera, Telenor, AustriaTelekom, Portugal Telecom and Belgianoperator Proximus -- had earlier urged regulators toconsider investment, innovation, efficiency and quality ofservice when assessing mergers.
"Our sector is in need of building scale and markets need tofunction at optimal levels," the CEOs said in a statement. "Wewant to ensure more investment and higher value for money forcustomers."
The call comes as Brussels is set to open an in-depthinvestigation into Three UK mobile network owner HutchisonWhampoa's 10.3 billion-pound ($15.7 billion) deal tobuy Telefonica's O2 UK and make the combination thecountry's biggest operator ahead of EE and Vodafone.
Meanwhile the UK competition regulator is vetting a $20billion deal for national fixed line network operator BT to acquire EE from Orange and Deutsche Telekom.
Vestager's predecessor in Brussels waved through similar"four-to-three" consolidation deals in Austria, Germany andIreland after concessions were made which were seen as conduciveto fostering sufficient competition, particularly from so-calledmobile virtual network operators (MVNOs).
Fries dismissed regulatory worries about mergers driving upretail prices, something which happened in Austria, Germany andIreland after the three big mergers.
"The argument about prices is fallacious. The idea thatconsumer bills are going up is because consumption is going up.They are using seven devices. There is a lot of paranoia....That is when you get bad decisions," he said.
A deal to join Hutchison and Vimpelcom's Italiansubsidiaries to cut the number of mobile network operators thereto three from four is expected to land on Vestager's desk nextyear.
The CEOs also called for lighter rules on giving networkaccess to market competitors, saying prices should only beregulated as an exception, in a plea to EU Commissioner GuentherOettinger who is currently reviewing the EU's telecoms rules.
"Commercial terms for network access should be the rule ...only in such a context can we deliver faster coverage for allEuropeans," they said.
($1 = 0.6557 pounds) (Additional reporting by Foo Yun Chee; Editing by Keith Weirand Mark Potter)
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