Telecoms group Ocean objected to cable operator Princes Holdings and its partner buying two other cable firms, it has emerged.
Ocean, a joint venture between the ESB and British Telecom, feared Princes would gain a key advantage if the takeovers were sanctioned and the enlarged group entered the telecoms market.
The takeovers, which are part of a radical shake-out and consolidation of the cable industry, involve an initial spend by Princes Holdings and Liberty Media of more than £100 million (€127 million). The deals will also see a major upgrading of the whole cable television system, involving everything from video on demand to Internet services.
Details of Ocean's concerns are contained in a report by the Competition Authority which was published last night. The authority recommended the acquisitions be allowed to proceed without conditions.
Princes is buying SuirNorerelays, which has around 15,000 subscribers in Kilkenny and Tipperary, for a figure which some media reports have put at up to £20 million. Princes' 50 per cent partner, Liberty Media, is buying CMI, which has 65,000 customers, for £80£90 million.
Princes/Liberty currently trades as Irish Multichannel. The enlarged group will have around 250,000 customers.
It is understood the group will begin providing telecoms services in March. The Minister for Enterprise, Trade and Employment, Ms Harney, had asked the authority to examine the acquisitions. It emerged that, at an oral hearing with the authority, Ocean said it had no argument against the proposed merger as such. Its main concern was about the future development of these markets, particularly with telephony and TV integration and the development of e-commerce.
Ocean pointed out that "the very nature of cable TV was that it worked in geographic franchise areas and only one cable TV operator was permitted in a particular geographic area".
The existing cable companies were offered exclusive five-year franchises last year within their existing platforms (i.e. cable) as part of a deal hammered out with the Office of the Director of Telecommunications Regulation. Ocean argued that the new grouping would be able to upgrade the cable system, offer packaged services and gain market share very quickly. Ocean contended that it would then have a competitive advantage as it would be the only company to have the franchise in that geographic area for TV services. If it then expanded its cable services to telecommunications, it would be in a preferential position.
Ocean also said that all types of telephony services could develop on the back of the cable service. It said this had happened in Britain where one could get free local calls when buying a subscription package. It added that services such as e-mail, interactive services and websites would be accessible on TV screens. Ocean said Princes would have 250,000 customers in a very concentrated area and access to 6070 per cent of the customers in the geographic area in which it operated, if the merger went ahead.
Ultimately, Ocean's fears were dismissed by the authority, which said the proposed takeovers were unlikely to prevent or restrict competition. It said the advent of a substantial new competitor to the telecoms market, which it said was still in its infancy, was to be welcomed.
