The merger of local data, fixed-line, cable TV and Internet provider Grupo GTD and Chile’s second-largest mobile telephone operator, Empresa Nacional de Telecomunicaciones SA (Entel), could be threatened as the National Economic Prosecutor (Fiscalia Nacional Economica, FNE) is reviewing the merger and has submitted recommendations to antitrust regulator Free Competition Tribune (Tribuna de Defensa de la Libre Competencia, TDLC). FNE has identified four areas that might present a number of risks to competition in the sector.
According to the document presented by FNE, the merger could increase concentration of the radio spectrum in the band 3.4GHz-3.6GHz and in some regions to concentrate up to three-quarters of spectrum allocations concessions in the merged company.
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With the merger, Entel would become the dominant player in Los Lagos, Aisen and Los Rios (regions X, XI and XIV) in the provision of fixed telephony services and fixed broadband, increasing the concentration levels in the same and the risks of anticompetitive conduct, particularly through the possibility of package such mobile services. FNE noted that Entel would absorb a competitor that was developing innovative service solutions, with no guarantee for its continuation.
The institution also noted risks of coordination regarding an agreement between rival operator Telefónica Moviles (Movistar) and Telsur, which is owned by the GTD Group, to provide network services through mobile virtual network operator (MVNO) by the latter. The watchdog raised concerns over the continuation of wireless services because Entel has its own mobile subsidiary.
To reduce the risks, FNE has suggested the TDLC impose conditions on the operation: Entel must sell 50 megahertz of spectrum that is assigned in the 3.4GHz-3.6GHz band; Telsur must either sell its MVNO arm or abandon its agreement with Movistar; the merged company must sell a variety of facilities wholesalers in regions X and XIV, so that other market participants can provide the same services; the Telsur conditions of the offer of facilities in region XI would be reviewed; and the merged company must keep GTD products offers for a period of two years.
The merger intention was announced Nov. 30. The move would help Entel compete against its main rivals Movistar, the local unit of Spain’s Telefonica Moviles SA, and Claro, owned by Mexico’s América Móvil SAB.
The companies said the merger would be an all share-agreement. Entel and GTD signed a nonbinding letter of intent to merge their operations.
Entel said today that it will proceed with the merger, keeping with a Jan. 13 deadline for both companies to sign the contract. Entel General Manager Antonio Büchi said the carrier is studying consultation undertaken by the FNE. “We understand the interest of the authority to analyze the details of this operation. We believe this is positive for the development of the telecommunications industry and strengthening competition in this important sector. While not yet materialized the final agreement between the controllers of both companies, will lend full cooperation to the FNE and the rest of the authorities,” he said.
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