KPN says it would fight any plans to merge Dutch cablecos

18 Jul 2006

The Netherlands’ former fixed line monopoly Royal KPN says it would fight on antitrust grounds any plans to merge the Dutch cable companies Casema and Multikabel. According to Dow Jones, KPN spokeswoman Caroline Ubachs has confirmed that the telco will inform the Dutch competition authority NMa that it is against a consolidation in the Dutch cable sector. The announcement comes in the wake of the success of private equity firms Warburg Pincus and Cinven Group in the auction to buy the country’s third largest CATV operator Casema. For Warburg Pincus, it would represent a quadrupling of its Dutch cable TV business, having acquired Multikabel in 2005.

Cinven and Warburg Pincus have agreed to buy Casema from the Carlyle Group, Providence Equity and GMT Communications for EUR2.1 billion (USD2.64 billion). At the end of June 2006 Casema had 1.3 million TV subscribers, 400,000 broadband users and 136,000 telephony customers. The transaction is expected to close in the second half, pending regulatory approvals.

Analysts do not expect the NMa to object to any future plans to merge the two operations on the grounds that the enlarged entity would not dominate the market. However, the development is bad news for KPN which is already in a pitched battle with the cablecos for telephone, internet and television customers. KPN has sued the government for what it describes as ‘unfair regulation by competition authorities compared with their approach toward cable companies.’ The incumbent has resorted to legal pressure, arguing that it is having to defend itself ‘with one arm behind its back’.

Netherlands, KPN