The European Commission has approved, under the EU Merger Regulation, the transaction by which Deutsche Telekom (DT) as an indirect owner is selling its 54% majority stake in the Romanian fixed line operator Telekom Romania Communications (TKR, formerly Romtelecom) to French Orange’s local subsidiary. The deal is conditional on the divestiture of TKR's 30% minority shareholding in Telekom Romania Mobile Communications (TRMC), which is a direct competitor of Orange.
In November 2020, Orange Romania signed a deal to buy a 54% stake of the fixed services operator TRC from Hellenic Telecommunications Organization (OTE), part of Deutsche Telekom group, for a price of €268mn, subject to ex-post adjustments.
The Romanian state has signed an agreement in principle with Orange for the takeover of Telekom's fixed operations and will hold 20% of the shares of the future entity.
Following its investigation, the Commission found that the transaction, as initially notified, would have raised serious competition concerns on the market for retail mobile telecommunications services. In particular, Orange would have acquired TKR's 30% minority shareholding in TRMC, one of its key competitors on this market.
This might have reduced Orange's incentives to compete with TRMC, would have given Orange access to commercially sensitive information about its competitor, and allowed it to block important investments by TRMC or the operator's acquisition by a strategic buyer, the Commission explained.
To address this issue, the Commission proposed corrective measures, namely the transfer of the 30% minority interest held by TKR in TRMC to OTE, which is the current majority shareholder of TRMC and a subsidiary of DT.
Notably, the Romanian state holds 46% of the shares of TKR, the majority stake being held by OTE, in its turn controlled by the Deutsche Telekom (40%).
The Romanian state agreed with DT to sell its majority stake in TKR to Orange, but in principle may express preemptive rights over the 30% stake in TRMC.