KDG’s Tele Columbus deal blocked by authorities

The acquisition of Tele Columbus by Germany’s leading cable operator Kabel Deutschland (KDG) has been blocked by the Federal Cartel Office, the Bundeskartellamt.

The regulator rejected KDG’s offer to sell off Tele Columbus networks in Berlin, Dresden and Cottbus to assuage its concerns that the combination would have an adverse impact on competition.

The Bundeskartellamt instead insisted that KDG sell off about 60% of Tele Columbus’s networks in eastern Germany, twice as many as KDG was willing to countenance.

“The Company regrets the Cartel Office’s assessment. Kabel Deutschland’s remedy offer was far reaching and went to the commercial limit. The envisaged transaction would have benefited infrastructure competition as well as consumers. As a result of the envisaged acquisition,over 900,000 households in eastern Germany would have obtained first-time access to high speed internet over cable,” said KDG.

In addition, it said, the company would have expanded beyond its current footprint by entering into competition with Unitymedia-KBW for contracts with housing associations in North Rhine-Westphalia and Hesse.

“Irrespective of today’s outcome on the Tele Columbus acquisition, Kabel Deutschland will continue to pursue its strong organic growth strategy focusing on internet and phone and premium TV. The company’s superior broadband infrastructure and products provide a unique basis for sustained growth over the coming years,” it said.

CEO Adrian von Hammerstein said that KDG was “not dependent on this transaction as we have our own powerful infrastructure and attractive internet and television products” with the potential to delivery years of strong organic growth.

Tele Columbus CEO Ronny Verhelst said he regretted that the pair had been unable to eliminate the concerns of the Bundeskartellamt. “A combination of our two companies would further the rapid expansion of cable as the the most powerful multimedia platform on the German market and also further the interests of customers,” said Verhelst.

He said that Tele Columbus would be able to prosper on its own, nevertheless, noting that it had posted record growth in residential multimedia business in 2012 and was also expanding its business-to-business offering, targeting medium-sized enterprise customers.