The Bulgarian telecommunications sector is primed for a major reshuffle after Dutch-based United Group (UG), the owner of market leader Vivacom, announced plans to acquire the largest paid TV operator in the country, Bulsatcom. The news triggered heated reactions from the other two telcos, A1 Bulgaria and Yettel Bulgaria, which said they would challenge the deal. UG insists the transaction meets the regulatory requirements.
UG recently announced it had signed an agreement to buy Bulsatcom but did not name the seller. In 2022 Bulsatcom was acquired by local businessman Spas Rusev but it later emerged that the transaction was financed with a loan from UG. Back then A1 and Yettel objected to the deal, saying UG would soon take control over the company. Approached by the Capital Weekly, UG declined to say whether Bulsatcom's acquisition would be a debt-for-equity transaction.
Reading data
Industry sources say the most challengeable aspect of the deal is related to TV distribution. Data of the Commission on Regulation of Communications (CRC) show that Vivacom has 668,000 paid subscribers and Bulsatcom has 542,000, and that together they hold 59.6% of the market in terms of subscribers and 56.7% in terms of revenues. That is the argument of A1 and Yettel too - that Vivacom would gain a dominant position on the market of television (60%) and landline internet (40%).
UG disagrees. "We will not have 60% even after acquiring Bulsatcom. The estimation is incorrect, as it does not take into account the entire market of TV content distribution, which is extremely competitive in Bulgaria. CRC data show there are 244 active Bulgarian TV operators and most international streaming giants like Netflix, HBO, Disney+, Amazon, etc. are also present," UG told the Capital Weekly.
Opposition
As for now, A1 Bulgaria is the more vocal opponent of the deal. "We expected that acquisition and we warned of it when the loan to Bulsatcom was announced. It was clear Vivacom's owner was trying to acquire Bulsatcom in a covert and unregulated manner," A1 Bulgaria CEO Alexander Dimitrov told the Capital Weekly.
In response UG said: "A1 has recently announced partnership in Bulgaria and a few other countries with Netflix. That is an obvious attempt at establishing a dominant position on the Bulgarian market of TV distribution; it illustrates the growing power of international OTT platforms on that market. While A1 is partnering with a global giant, Vivacom is trying to save a national platform operator," the group commented for the Capital Weekly.
Both Yettel and A1 Bulgaria say they will challenge the deal before the Commission on Protection of Competition. The request for concentration was published on November 16 and the anti-trust body has five weeks to come up with a decision or launch a detailed inquiry if there are reasonable doubts that the concentration will create or strengthen an existing dominant position, impeding efficient market competition. The latter option will give the CPC four months to come up with a ruling or further extend the term. Therefore a decision is more likely next year and then it can be appealed in court.
The Bulgarian telecommunications sector is primed for a major reshuffle after Dutch-based United Group (UG), the owner of market leader Vivacom, announced plans to acquire the largest paid TV operator in the country, Bulsatcom. The news triggered heated reactions from the other two telcos, A1 Bulgaria and Yettel Bulgaria, which said they would challenge the deal. UG insists the transaction meets the regulatory requirements.
UG recently announced it had signed an agreement to buy Bulsatcom but did not name the seller. In 2022 Bulsatcom was acquired by local businessman Spas Rusev but it later emerged that the transaction was financed with a loan from UG. Back then A1 and Yettel objected to the deal, saying UG would soon take control over the company. Approached by the Capital Weekly, UG declined to say whether Bulsatcom's acquisition would be a debt-for-equity transaction.
