European Commission Approves French Fibre Acquisition

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Altice/SFR gets the go-ahead to buy wholesale rival Covage, but will spin off its fibre-to-the-office operations into an independent unit

The European Commission has approved a proposal by SFR FTTH to acquire rival French fibre broadband provider Covage, after SFR’s owners Altice, Allianz and Omers offered major concessions in the deal.

Covage is France’s leading independent provider of wholesale access to fibre capacity, particularly in areas of low population density.

Altice/SFR, meanwhile, is Covage’s main competitor and is active in both wholesale and retail, with Allianz and Omers being financial investors jointly controlling SFR FTTH along with Altice.

The Commission was initially reluctant to approve the deal as SFR and Covage have significant overlaps in the provision of fibre to the office (FTTO).

covage, fibre

Fibre dominance

Regulators feared the deal would have created a large FTTO market leader both nationally and in a number of local markets.

The proposal also raised vertical integration concerns as Covage would have become integrated into SFR’s retail operations, giving it the incentive and ability to shut out competing retailers’ access to Covage’s wholesale network.

In areas such as fibre to the home, however, applicable laws and France’s national telecoms regulator ARCEP had several regulatory tools in place to keep markets competitive.

Altice, Allianz and Omers offered to spin off most of Covage’s FTTO business into an independent entity, while providing access to assets and services during a transitional period to allow the divested business to become fully independent.

The Commission said this offer resolved its competition concerns.

Competition

“It is important for local authorities to have alternative suppliers for the construction and management of high-quality fibre-to-the-office networks,” said Commission executive vice president Margrethe Vestager.

“Covage directly competes with the Altice-owned company SFR on these markets, so we approved the acquisition of Covage thanks to comprehensive divestments to ensure that competition will remain to the benefit of local and international customers and consumers in France.”

In the UK, the government’s plans for an accelerated rollout of fibre to the home recently hit the skids after a financial review found the plans were no longer viable.

The government had promised gigabit-speed broadband to all British homes by 2025, but last week said it is now only aiming for a “minimum of 85 percent coverage” by that date, while keeping the project’s £5bn budget intact.

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