PPF Telecom and A1 are concerned about a decision by the Commission for Protection of Competition (CPC) that favours their competitor VIVACOM in Bulgaria, the two telcos said in statements on Monday.
CPC has approved a set of deals that will lead to a huge concentration of market share and power in the hands of VIVACOM and its ultimate owner, United Group. The regulatory decision will effectively undermine competition in Bulgaria's telecoms market and thus lead to the creation of a dominant player to the detriment of consumers, PPF Telecom said in a statement obtained by BTA.
CPC approved the transactions, which will result in VIVACOM controlling nearly 70% and 50% of the internet access market in the Ruse region and the Varna, Razgrad, Silistra and Sofia-city regions, respectively, PPF Telecom wrote.
In a position received on Monday by BTA, A1 Group, along with its local subsidiary A1 Bulgaria, expresses great surprise and concern over CPC’s decision to authorize Vivacom's acquisition of Networks-Bulgaria, the largest operator in northern Bulgaria, as well as six other smaller companies across the country. This development further adds to the apprehension surrounding the regulatory decisions, as it reinforces the potential for the creation of a dominant player in the Bulgarian telecom marketplace, which poses significant disadvantages for the consumers, A1 Group says.
The decision was halted by the Supreme Administrative Court and remanded back to the regulator for review due to indications of a significant impediment to effective competition and concerns of excessive concentration. Going forward pending final approval of yet another acquisition of economically and infrastructurally strong operators would enable Vivacom to acquire over 60% of the TV distribution market and nearly 40% of the internet market. Such consolidation not only hampers market competition but also runs counter to the best interests of society as a whole.
What is happening is particularly worrying in light of the forthcoming decision to acquire the biggest broadband operator - Bulsatcom. According to publicly available information, this transaction is an attempt by United Group to acquire control of Bulsatcom's operations without notification to the CPC and under suspicion of some other legal infringements. The potential acquisition of Bulsatcom, together with the other seven companies, poses an even greater risk of consolidating the market position of a single player, potentially leading to dominance at the expense of both competitors and consumers. In view of its strategic role in the country and the region, A1 Group has already alerted the European Commission about its concerns regarding the hidden buyout of Bulsatcom by United Group, the operator said.
In Bulgaria, A1 is one of the largest investors in the country with investments of nearly BGN 5 billion to date and plans for over BGN 1 billion more over the next 5 years. Being part of the fourth biggest telecom provider in the world - America Movil - A1 Bulgaria follows the highest standards, conducting its business on two continents transparently, in full compliance with legislation and corporate ethics and trust in the rule of law. A1 Bulgaria therefore expects clear rules and predictable regulation to ensure impartial decisions and fair competition. The role of the state and industry regulators is to strike a delicate balance between the interests of businesses and consumers. However, the observed behavior of market participants raises concerns about the potential emergence of a monopoly, which could adversely affect the quality and pricing of services provided to end users, the release said.
CPC's decision has raised our concerns in relation to the upcoming consideration of the proposed acquisition of Bulsatcom's network by Slovenia Broadband, the sole owner of VIVACOM. If approved, the proposed acquisition would result in full concentration of the entire national market and infrastructure power far in excess of normal thresholds recognised in all other markets in the European Union, PPF Telecom wrote.
PPF Telecom has repeatedly raised concerns with the CPC about the sustainability and protection of a level playing field in the fixed services sector as a result of the consolidation of the segment. One of the most disturbing and flagrant breaches of regulatory procedures occurred when it emerged that the acquirer Bulsatcom had failed to notify CPC in a timely manner of the source of funding for the transaction, which was a EUR 127 million loan from United Group.
CPC's decision of 15 June 2023 underlines VIVACOM's leading position in the Bulgarian TV distribution market, where it holds a 32.9% share. VIVACOM is also the leader in the fixed internet market, controlling 31.4% of the total market, PPF Telecom said.
Acting on behalf of Yettel Bulgaria and CETIN Bulgaria, PPF Telecom intends to raise these issues with the European Commission, reserving all its rights of defence in the meantime, PPF Telecom wrote.
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