Following approval from shareholders and the securities commission, the merger between Portugal’s number one-cableco Zon Multimedia and number three-mobile operator Optimus still requires approval from the antitrust regulator, the Portuguese…
Following approval from shareholders and the securities commission, the merger between Portugal’s number one-cableco Zon Multimedia and number three-mobile operator Optimus still requires approval from the antitrust regulator, the Portuguese Competition Authority (PCA).
The transaction was filed with the PCA in early February, and if the regulator has no concerns it could simply waive the deal through. Alternatively it could launch an in-depth review.
As part of the process the antitrust regulator has asked the opinions of the telecoms regulator and the media regulator, neither of whom objected to the tie-up. Despite this, a person briefed on the matter from one of the merging parties said they are expecting an in-depth review to be launched.
Jaime Medeiros, a partner at law firm CRA, told TelecomFinance that he believed the PCA’s main concern about the deal was the potential for it to strengthen a duopoly in the fixed-line market.
Although the deal combines a cable and a wireless operator, implying that there is no direct overlap, Optimus also has a 11.7% share of the fixed-line telephone market.
Zon is already the number-two fixed provider with 19.7%, according to statistics from the local telecoms regulator, Anacom, and Portugal Telecom controls more than half of the market. Smaller players like Cabovisao have shares of 5.4% or less.
The regulator will have to establish whether or not an increase in market concentration post-merger creates a dominant position that results in significant barriers to effective competition from smaller players.
Competitors Portugal Telecom, Vodafone and Cabovisao have all submitted comments to the PCA, although it is not known if or what kind of objections they raised.
The PCA received the merger application on 1 February, but the 30 working day first phase of the investigation was suspended when the regulator requested additional information from the merging parties. Therefore it is not yet known if an in-depth analysis will be launched.
“Most probably we will have a decision in the next two weeks,” Medeiros estimated.
A second phase could considerably delay deal closure, adding 90 to 100 working days to the investigation to allow the regulator to scrutinise the proposed deal in detail.
A Portuguese equity analyst described the closing date was a key question: “Zon and Optimus have been saying that they expect a decision by June or July, but for me it seems a bit optimistic, looking at the competition authority track record,” he said. “I would expect something more close to the end of the third quarter.”
