Little more than a month after its announcement, the merger of local data, fixed-line, cable TV and Internet provider Grupo GTD with Chile’s second-largest mobile telephone operator, Empresa Nacional de Telecomunicaciones SA (Entel), is cancelled. Yesterday (January 9) Entel’s controller, Almendral Telecomunicaciones SA, sent a material fact to the Chilean stock market Superintendencia de Valores y Seguros (SVS), reporting the failure of the merger.
“Mr. Juan Manuel Casanueva Préndez, representative and controller of Inmobiliaria e Inversiones El Coigüe, a company which controls GTD Grupo Teleductos, stated that he was withdrawing…” said Alvaro Correa, general manager of Almendral, in the material fact sent to SVS.
The brief presented to the regulator continues by stating that the merger “will not take effect, as the market had been previously informed, solely due to the unilateral withdrawal of Juan Manuel Casanueva.”
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“While this operation was complementary to Entel and would accelerated our planned deployment of connectivity for businesses and home segments, our business strategy remains the same. Moreover, this encourages us to deepen our deployment infrastructure for further growth in fixed connectivity services,” said Entel’s general manager Antonio Büchi.
Earlier this month, the National Economic Prosecutor (Fiscalia Nacional Economica, FNE) started to review the merger and 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 allocation concessions in the merged company.
The merger intention was announced Nov. 30. The move would have helped 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 had said the merger would be an all share-agreement. Entel and GTD signed a nonbinding letter of intent to merge their operations. By the time FNE presented its concerns, Entel’s Büchi said the carrier was 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.
