By Natalia Drozdiak 

BRUSSELS--European Union antitrust regulators on Wednesday approved plans by Liberty Global PLC and Vodafone Group PLC to set up a Dutch telecoms joint venture on the condition Vodafone sheds its consumer fixed-line business in the Netherlands.

Vodafone in February said it would pay Liberty Global EUR1 billion ($1.12 billion) to combine Liberty Global's Dutch cable and internet businesses with Vodafone's local mobile business. The deal would value the 50-50 joint venture's synergies at roughly EUR3.5 billion in terms of combined revenue and capital expenditure, after integration costs.

"The commitments offered by Vodafone ensure that Dutch consumers will continue to enjoy competitive prices and good choice," said EU Antitrust Chief Margrethe Vestager.

In a joint statement, the companies said they welcomed the EU's conditional clearance, adding that they've "already received a number of expressions of interest [for Vodafone's fixed business and that] the parties will now proceed with the sale process."

The divestment may also include access to networks for mobile virtual network operators, the companies said. Such operators don't own networks of their own but piggyback off other networks.

The EU competition regulator in the past has warned against large telecom mergers in the region and voiced skepticism toward arguments by incumbent telecom operators saying they need to merge with rivals in the same country to increase their investment in networks.

The European Commission, the bloc's antitrust regulator, in May blocked CK Hutchison Holdings Ltd.'s planned multibillion-dollar acquisition of British mobile operator O2, but partly because the combination of the two mobile operators in the U.K. would have granted the merged company access to both of Britain's networks and to a full overview of its rivals' network plans.

In the Liberty-Vodafone deal, the companies are merging cable and internet businesses with a local mobile business to create a company with more than 15 million subscribers, according to Liberty Global.

Telecom and cable operators are eager to use so-called "quadruple-play" services--encompassing fixed-line and mobile telephony, broadband internet and pay-television--to increase subscriber revenue and improve customer loyalty.

The commission said it initially had concerns the Dutch deal would reduce competition in the markets for fixed line multiple play services and fixed-mobile multiple play services in the Netherlands but that the divestment offered fully addresses the potential problem.

The remedy "will allow the purchaser of the divested assets to play a competitive role similar to that of Vodafone today," the EU said in a statement, adding that the concession "entirely removes the overlap" between the companies in those markets.

Vodafone's Dutch consumer fixed business has a customer base of more than 120,000, according to the companies.

The EU on Wednesday also said it had rejected a request by the Dutch competition authority to transfer the merger review to the regulator in the Netherlands, saying it was better placed to deal with the case and to ensure that telecoms mergers are assessed in a consistent way.

Transferring the review to the national regulator may have complicated the chances of the deal being cleared.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

 

(END) Dow Jones Newswires

August 03, 2016 11:37 ET (15:37 GMT)

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