Orange sticks to Jazztel plan as EC opens 'in-depth' probe

Orange said it will continue to pursue a planned €3.4 billion ($4.2 billion) acquisition of 100 per cent of Spanish fixed-line operator Jazztel despite the European Commission opening an in-depth investigation to assess whether such a deal would be in line with European Union merger regulation.

In a statement following the Commission's announcement, Orange said it had already included "this new phase of the proceeding" in the current schedule for the deal, and "maintains its ambition to close the operation during the first half of 2015."

The Commission said it decided to investigate the deal to determine whether or not the proposed transaction would lead to a significant loss of competitive pressure for fixed Internet access services and fixed-mobile multiple play offers.

"The loss of Jazztel as an important competitive force could lead to price increases for these services for customers in Spain. The opening of an in-depth investigation does not prejudge the outcome of the investigation," said the Commission, which has until Apr. 24, 2015 to take a decision.

Orange said it is still confident that the deal will have a favourable outcome, creating the Spanish market's second-ranked fixed broadband operator. "In doing so, Orange plans to accelerate customer convergence and its growth in a highly competitive market," the operator added.

The France-based operator, which competes in Spain with Telefónica, Vodafone, and Yoigo, launched its "friendly" offer for Jazztel in mid-September.

Buying Jazztel would put Orange on a more level playing field in a market where bundles of fixed and mobile services have become a dominant play. Telefónica already offers a strong quad-play proposition with the Movistar Fusion bundles of fixed and mobile voice and data services combined with TV, while Vodafone Spain enhanced its position with the acquisition of Spanish cable operator Ono.

Yoigo's parent TeliaSonera is also reviewing its options for the Spanish market: in July the Sweden-based company said its Spanish business remains sub-scale with a market share of around 7 per cent.

For more:
- see this Orange statement
- see this statement by the European Commission

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