Commission probes UAE state-owned acquisition of Czech telecoms operator

5 months ago 16

The European Commission opened a new foreign subsidies investigation into a commercial acquisition that would see UAE state-owned Emirates Telecommunications Group Company (e&), be in ‘sole control’ of the European telecom operator PPF Telecom, according to a Monday (10 June) press release.

EU regulators have been concerned about the influence of foreign companies in the bloc’s telecoms sector for a while, as Europe’s networks are increasingly coming under foreign control.

A preliminary investigation has given “sufficient indications that e& has received foreign subsidies distorting the EU internal market,” reads the Commission press release.

The United Arab Emirates (UAE) Federal Government effectively owns 60% of e& through its Emirates Investment Authority. The part of PPF Telecom that e& acquired has 10 million customers throughout Czechia, Bulgaria, Hungary, Serbia (Yettel) and Slovakia (O2), the said the Commission.

Even though PPF is headquartered in Czechia, that part of its business was not included in the acquisition.

In the e& case, “the alleged subsidies notably take the form of an unlimited guarantee from the UAE and a loan from UAE-controlled banks directly facilitating the transaction,” according to the Commission.

The EU executive was notified of the investigation on 26 April, and is expecting to finish its probe by 15 October.

These subsidies may have had negative effects on the acquisition process, by “allowing e& to deter or outbid other parties interested in the acquisition and/or by allowing e& to perform the acquisition in the first place,” said the press release.

In turn, the subsidies may lead to negative effects for the EU market they added.

The investigation is taking place under the Foreign Subsidies Regulation, an EU act for managing the economic impacts of foreign government subsidies which entered into force in July 2023.

In April, the Commission launched a probe into Chinese companies bidding for a solar panel park in Romania under this Foreign Subsidies Regulation.

The investigation in e& comes after the Guardian reported that the UK government said that the 14.6% stake of e& in UK telecom operator Vodafone posed a national security risk for the country.

In April 2023, the PPF Telecom announced that UAE’s e& acquired “a stake of 50% plus one share” of the group.