EU probes Vivendi pay-TV plans

Purchase of telco Tele2 in spotlight

PARIS — Vivendi has received a blow to its Internet pay-TV expansion plans following the launch of a detailed European Union probe into the Gallic conglom’s planned $450 million acquisition of Swedish telco Tele2’s French ops.

The European Commission announced the probe Tuesday, citing “competition concerns” with the sale of Tele2’s French fixed-line and broadband unit to French mobile operator SFR, jointly controlled by Vivendi and Britain’s Vodafone.

Deal would give Vivendi a modest stake in France’s growing high speed Internet market — a burgeoning new platform for pay-TV, which already provides access to a potential 4 million clients — at a time when its market leading satellite pay-TV operator Canal Plus has just gobbled up rival TPS, creating a single Gallic giant with around 8 million subscribers.

Co-incidentally TPS’s service came off the market Wednesday, although existing TPS clients will continue to receive the operator’s bouquet of channels for a while yet.

Announcing its decision to pursue the Tele2 probe through to August 2, the EU regulator said that SFR and Vivendi had offered some “undertakings” to allay competition concerns, but these had been “unsatisfactory and insufficient.”

The regulator said its investigation has already established the deal could weaken other rival high-speed Internet operators and “could therefore lead in due course to an increase in prices and a deterioration in the quality of supply.”

Vivendi and SFR’s upstream control over distribution rights to content and pay-TV channels might also raise antitrust issues, the regulator said.

For the moment, Tele2 is one of France’s smaller high speed Internet operators, with just 350,000 subscribers.

In all, France boasts 12 million high speed Internet subscriptions. Of those some 4 million “triple play” clients receive a package that includes Internet, telephone, and free and pay television services.

Orange dominates the sector, with around a 48% market share, followed by Free with around 39%, and close behind, Neuf Cegetel — a company that is 41% owned by Vivendi.

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