Vivacom Takes Over Bulsatcom in Bulgaria's Largest Telecom Merger

The Decision of the CPC

As is customary, there was no prior official information about the regulator's meeting and agenda. There have been no announcements to the media, and a press conference regarding the voted decision remains pending.

According to three independent sources of Capital, the decision has already been made. Unconfirmed information suggests that one of the seven members of the CPC was absent during the decision-making process, and another member expressed a special opinion. Expectations are that the decision will be made public within days, shedding light on the details and arguments behind it. CPC handled this deal with exceptional speed. In fact, they announced the commencement of a detailed study just before the Christmas holidays. Surprisingly, they concluded their deliberations with a decision in just one month. Typically, such investigations take three months, but there is an option for an extension, which is frequently exercised.

This telecom acquisition served as a litmus test for both the regulator and the politicians. Throughout its history, the CPC hasn't truly thwarted a cartel or prevented a concentration. However, there have been controversial bans, often driven by political motives, such as the Nova TV deal.

In the final hours leading up to the CPC's decision, several unusual events unfolded. Firstly, there was the inaugural protest in front of the commission building, with about fifty Bulsatcom employees voicing their objections to the acquisition by United Group. They claim that this move will have 'detrimental consequences' for more than 1,000 employees of the operator, as well as for consumers and the entire telecommunications market in the country.

Secondly, on Wednesday evening, co-chairman of WCC, Kiril Petkov, made a statement. He asserted that the CPC's mandate had expired, and the commission was on the verge of undergoing a change in composition. For this reason, the CPC should abstain from making a decision on the Bulsatcom transaction. His statement was prompted by a publication in Mediapool, which quoted portions of the yet-to-be-adopted decision.

Petkov's remarks immediately drew a response from United Group, who expressed their shock at Kiril Petkov's statement regarding the Bulsatcom case. They accused him of speculating on the future decision of the Commission for the Protection of Competition, labeling it as unacceptable interference by a politician in the workings of an independent administrative body.

The following day, during the CPC meeting where the decision on Bulsatcom was discussed, Boyko Borissov and Delyan Peevski made brief comments regarding Petkov's statement. They asserted that there was no need to rush into changing the commissioners, citing the common occurrence of regulators serving beyond their terms. The current composition of the CPC has been under their influence for years. This was evident in the case of the Czech fund PPF's attempt to acquire Nova TV in 2018 when the commission rejected the deal due to concerns of excessive concentration of telecom with media. However, a few months later, they swiftly approved Kiril Domusiev's acquisition of the media group. When he subsequently sold it to United Group, which also owns Vivacom, the CPC saw no issue with the transaction.

The two staunchest opponents of the acquisition, A1 Bulgaria and Yettel Bulgaria, have confirmed that they intend to challenge the decision. Several months ago, A1 CEO Alexander Dimitrov criticized United Group's desire to gain control of Bulsatcom as 'arrogant'. The international group had previously announced that they had no interest in taking over the operator. "We are convinced that the approval of this transaction would create a dominant position for a telecommunications company and harm the interests of consumers. If the transaction for the acquisition of Bulsatcom is approved, Yettel will appeal to the competent court after reviewing the reasons provided by the Commission for the Protection of Competition," declared Yettel Bulgaria. United Group, on the other hand, has not yet received official information about the decision and, like all other interested parties, awaits confirmation, including access to the decision's content, before making any comments.

Although the decision is not yet official, Capital reports that the primary argument in favor of the transaction, according to the commission, is that the combined entity of Vivacom and Bulsatcom will not command a 60% share of the television supply market, as indicated by KRS data for customers of the two operators. According to the regulator, their total share would be much smaller, at 41%. The market is considerably larger than official studies suggest because it includes subscribers to streaming services like Netflix. Additionally, the commission does not foresee any issues in the fixed internet market since the number of subscribers for Vivacom and Bulsatcom in this segment declined between 2020 and 2022, while Yettel experienced growth.

The final outcome, assuming the decision is appealed as expected, will be known in a few months. The court may decide to remand it for reconsideration with specific directives. At that point, the composition of the commissioners may have changed, potentially resulting in a different assessment of the transaction's impact on the market. However, the court may also uphold the decision.