​Vodafone-Liberty deal draws EU questions on German rental market and bundles

19 February 2019 12:37am

12 February 2019. By Andrew Boyce and James Pressley.

Vodafone's plan to buy Liberty Global's cable business in Germany and three other countries has drawn detailed questions from EU regulators, who are seeking information about how the deal would affect the German market, MLex has learned.

The request came this month in questionnaires from the European Commission, seen by MLex. The regulator is attempting to scope out the national telecom and broadcasting markets, and how they may have changed in recent years.

The 100-odd questions touch on issues ranging from how frequently German consumers buy bundles of telecom services to how far Netflix has spread in the country.

They form the latest round of questions dispatched by the commission to the merging companies’ rivals and customers, following previous requests in December and January.

— Rental households —

The new questionnaires devote several pages to customers who live in rented accommodation and receive their television service as part of their lease.

This market for “multi-dwelling units,” as they’re known, has long been a politically sensitive topic in Germany, where almost half the population lives in rented housing.

Past German competition reviews of mergers in the cable sector have highlighted the risk of creating a cable network that could control up to 75 percent of Germany’s market for delivering retail television to MDUs.

The commission’s questionnaires ask about the provision of TV signals to MDUs and how the contracts differ from those covering “single-dwelling units,” or private homes.

“How common is it for tenants to choose a different retail TV provider from the one they are [already] paying for?” the questionnaires ask. In other words, do tenants willingly make “a double payment”?

Other questions ask whether MDU customers get their TV signals through satellite, which remains among the most widely used forms of TV reception in Germany.

— Bundles and Internet TV —

But the commission’s interest isn’t limited to the MDU market. The questionnaires also ask about business customers, the growth of Internet protocol TV, the bargaining power of retail TV service providers, and the “main drivers” that prompt cable operators to upgrade their networks.

The commission wants to know to what extent German consumers are interested in taking bundles of telecom and TV services.

Vodafone announced in May that it had agreed to buy Liberty Global’s assets in the four European countries for 18.4 billion euros ($20.8 billion today). The commission opened an in-depth probe into the acquisition on Dec. 11.

It voiced concerns that the deal would harm competition in Germany, where Vodafone and Liberty Global own cable networks that operate in different regions.

The regulator said the deal could limit competition between Vodafone, Liberty Global and other national operators, and might harm competition for investment in “next generation networks.” It also cited concerns the deal would increase Vodafone’s bargaining power in relation to TV broadcasters.

The German side of the deal has drawn opposition from several market players, including Deutsche Telekom, Telefónica, broadcasters and rival cable operators.

The commission currently has until June 3 to decide on the deal.

The commission’s case number is M.8864.

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