The European Commission unconditionally approved the $24 billion deal for New York-based investment firm KKR & Co (NYSE: KKR) to acquire fixed network assets, operating as NetCo, from Italian incumbent local exchange carrier, TIM. The EC concluded that the transaction would not raise competition concerns in the European Economic Area, Telecoms.com reported.
NetCo operates TIM’s fixed-line access and transport network business along with FiberCop, a joint venture between TIM and KKR comprising TIM’s secondary fixed-line network, Inside Towers reported. KKR and TIM agreed on a master services agreement that will govern the relationship between NetCo and TIM post-transaction.
The EC’s investigation focused on the impact the transaction would have on the market for wholesale broadband access services in Italy. In the end, the EC determined that KKR would not have the ability to restrict access to passive services, stating: “For each wholesale product the number of available networks and wholesale providers will stay the same and the market power of NetCo will not materially increase as compared to TIM or FiberCop today.”
It also judged that the transaction would not increase the likelihood of coordination between NetCo and OpenFiber, stating: “[Swisscom’s Italian broadband subsidiary] Fastweb will continue to exert competitive pressure on NetCo and its long-standing competitor, Open Fiber. In addition, NetCo and Open Fiber will likely continue to compete, both to attract new customers and to roll-out fiber networks, either in new areas or in each other’s areas.”
Upon getting the green light, TIM said in a statement: “TIM welcomes the positive assessment received from the European Commission regarding the transaction for the sale of NetCo to Optics BidCo, a subsidiary of Kohlberg Kravis Roberts & Co. L.P. and notified by the buyer on April 19. The European Commission’s Phase 1 decision confirms that the transaction will be completed on schedule.”
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