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E.U. More M&A activity predicted in mobile sector, but doubts over deal in Germany

By  |  December 20, 2012

The Federal Cartel Office has expressed concerns over Kabel Deutschland’s plans to acquire Tele Columbus, saying the deal between the cable operator and telecom company may hamper competition. If the deal were to go through, says the FCO, Kabel Deutschland and Unitymedia Kabel BW would be the only two dominant entities, essentially forming a duopoly in certain regions of Germany. The FCO noted that the potential harm to competition would affect both the competition for contracts with residential property companies as well as the competition for purchasing power over broadcasting companies. The deal has been proposed for $769.6 million, a price that would fully repay Tele Columbus’s debts.

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    If the deal in Germany is to go through, it could be part of a larger trend. The media has reported that some financial analysts have expected merger and acquisition activity to increase across Europe to consolidate the continent’s largely fragmented mobile market. While German authorities have expressed doubt over the Kabel/Tele Columbus deal, European commissioner Joaquin Almunia is expected to approve of a merger between 3Austria and Orange Austria in a move some experts say could start a catalyst for easier mergers between mobile telecom companies.

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