EC approves Altice takeover of PT Portugal, on condition it sells Cabovisao and Oni

21 Apr 2015

The European Commission (EC) yesterday approved the proposed acquisition of the Portuguese fixed and mobile telecoms operations of PT Portugal by the multinational cable and telecoms group Altice, conditional upon the divestment of Altice’s current Portuguese businesses Onitelecom (Oni) and Cabovisao. In its decision, the Commission explained it had concerns that the merged entity would have faced insufficient competitive constraint from the remaining players in the market for fixed telecommunications, potentially leading to higher end-user prices, and the divestments of corporate telecoms provider Oni and cableco Cabovisao address these concerns.

PT Portugal offers fixed, mobile, broadband internet and pay-TV services to residential customers under the MEO brand, alongside a business telecoms services range under the PT Empresas banner which also includes data/IT solutions, data centres, virtualisation services, cloud, business outsourcing process and other solutions.

Cabovisao provides pay-TV, fixed internet access and fixed telephony services largely to residential customers; Oni’s business customer portfolio includes fixed voice, data/internet access and IT services.

The EC initially had concerns that the merger would have reduced competition in a number of telecommunications markets in Portugal, including the wholesale markets for leased lines and for call transit services, the provision of fixed voice services, fixed internet access services and pay-TV services to residential customers, as well as services for business telecoms customers. The condition to sell Cabovisao and Oni completely removes the overlap between the activities of Altice and PT Portugal within Portugal.

In December 2014 Brazilian telco Oi SA agreed to sell its PT Portugal Telecom SGPS (‘PT Portugal’) operating unit to Altice Portugal, a wholly owned subsidiary of Altice Group based in Luxembourg, for EUR7.4 billion (USD9.2 billion), including a EUR500 million deferred payment related to the Portuguese business’ future performance. The deal did not include PT Portugal’s main international assets – the Africatel holding company or Timor Telecom – which were agreed to be separated from PT Portugal prior to the sale to Altice (while the restructured PT Portugal unit would retain a 45% stake in Hungarian satellite data transmission company Hungaro Digitel [HDT]). Approval from shareholders of holding company Portugal Telecom SGPS followed on 22 January 2015.

In a parallel decision, the EC yesterday also rejected a request from Portugal to refer the Altice-PT Portugal merger to the Portuguese competition authority (PCA) for assessment under Portuguese competition law. The Commission concluded that, ‘given its extensive experience in assessing cases in this sector and the need to ensure consistency in the application of merger control rules in the fixed telecommunications sector across the European Economic Area (EEA), it was better placed to deal with this case.’