EU Antitrust Regulators Approve Vodafone-Liberty Global Joint Venture -- Update
August 03 2016 - 11:52AM
Dow Jones News
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)
Copyright (c) 2016 Dow Jones & Company, Inc.
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