Orange has finally received clearance from the European Commission (EC) to buy a majority (54%) stake in Telekom Romania Communications (TKR).
The deal, which was first announced last November, values the stake, until now owned by Deutsche Telekom’s Greek subsidiary OTE, at €268 million. It will give Orange control of Romania’s second largest provider of fixed telecom services and place it in a much better position to compete with RCS&RDS (Digi) and Vodafone (owner of UPC’s former assets) in the provision of converged services.
However, the EC’s ruling is conditional as it requires TKR to sell its minority (30%) interest in Telekom Romania Mobile Communications (TRMC) as it is a direct competitor of Orange. TRMC is majority (70%) owned by OTE and one of the four main mobile operators in Romania.
Orange has proposed selling TKR’s stake to OTE, thereby making the latter TMRC’s sole owner, and it remains to be seen if the EC approves such a move.
Significantly, in its investigation into the sale of TKR to Orange the EC found no competition concerns in such areas as the provision of fixed-mobile convergent (FMC) services, the retail market for business connectivity services and the wholesale market for the supply and acquisition of TV channels. Indeed, in the case of FMC it concluded that Orange would be able to offer services more efficiently.
The EC’s ruling coincided with the release of encouraging results by Orange. They showed that the Romanian operation’s turnover in the second quarter amounted to €268 million, or 11% more than in Q2 2020, while in the first half they reached €532 million, up 6.6% on H1 2020. As of the end of June, it offered mobile, fixed and TV services to a total of 10,628,000 customers, up 4% on a year earlier, while its fixed broadband subscriber total increased by 17% over the year to 432,000.
Orange has also made significant strides in the provision of 5G services, which it now offers in at least 20 cities in Romania.
Its business will be even larger following the acquisition of TKR, which provides fixed voice, broadband and pay-TV services to around 5 million customers.
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