Antitrust watchdog concerned about Kabel Deutschland-Tele Columbus deal

10 Dec 2012

Germany’s Federal Cartel Office (FCO) has expressed concerns that cable operator Kabel Deutschland’s planned acquisition of indebted regional player Tele Columbus could have an impact on competition in the market. Reuters reports that in its preliminary legal assessment of the deal, the FCO stated that the proposed acquisition of Tele Columbus would eliminate a significant competitor to Kabel Deutschland and Unitymedia Kabel BW – the two dominant players in the regions of Germany where they are the incumbent operators – thereby cementing their duopoly and impacting on competition in the market. The FCO added that this applied to both competition for contracts from residential property companies and to the cable operators’ purchasing power over TV broadcasters. Kabel Deutschland entered into an agreement to acquire Tele Columbus for EUR603 million (USD769.6 million) plus accrued interest in May this year, notes TeleGeography’s GlobalComms Database. The overall purchase price – equivalent to EUR618 million as of 31 December 2011 – will provide for repayment in full of the financial debt of Tele Columbus, which provides cable services to approximately 1.7 million customers predominantly in Berlin and in Eastern Germany, including the cities of Dresden, Magdeburg and Potsdam.

The FCO, which has until 16 January 2012 to make a final decision on the deal, said that the merger parties can now make their case again and offer concessions. Kabel Deutschland, for its part, said in a statement that it ‘will thoroughly analyse the concerns voiced by the FCO and address them.’ The cableco added that it ‘will examine how the FCO’s concerns can be overcome by appropriate remedies and will submit a proposal to the FCO accordingly.’

Germany, Kabel Deutschland, Tele Columbus Group (PYUR)