Telenet takes over Base for €1.3 billion

Telenet, the Mechelen-based internet and cable TV provider, has taken over mobile phone operator Base from Dutch owner KPN for €1.33 billion. The acquisition gives Telenet its own mobile network for the first time.

The deal commits Telenet to invest €240 million on top of the sale price in the coming years. The sale has been the subject of rumours for several weeks. “With the takeover of Base, we are taking an important step towards assuring our mobile access over the long term, so that we will be better placed to take advantage of the growth opportunities offered by the sector of mobile communications,” CEO John Porter said in a statement.

Telenet already offers mobile services through the Mobistar network. That arrangement runs until 2017, which gives Telenet time to switch customers from one network to the other. In order to finance the acquisition, Telenet will borrow €1 billion on the money markets and make up the rest from its own reserves. The deal will lead to savings of €150 million a year, the company said.

Fees could go up

The sale brings an end to KPN’s divestment of all of its overseas holdings. The deal still has to be approved by the competition authorities. Consumer organisation Test-Aankoop said there could be a sizeable increase in mobile tariffs.

When Telenet’s transition is complete, Mobistar will have lost one-fifth of its clients, and its future, trying to compete with Telenet and Proximus – both of which also provide digital TV – is uncertain.

 “Base is disappearing, so we now have a duopoly on the Belgian telecoms market, and duopolies do nothing to hurt each other,” said Els Bruggeman of consumer organisation Test-Aankoop. “In theory the networks are open to outsiders, but the conditions in the small print are so onerous that no-one ever tries to get in. If those were dealt with, then we might see a third or even fourth player come on the scene. That’s the only way for competition to be restored and prices to be forced down.”

“Bad new for Belgium”

The takeover is “bad news for Belgian consumers,” according to Mobistar CEO Jean Marc Harion, posting on Twitter. However it is, he said, “an opportunity for regulators to open up the cable market”.

Federal telecommunications minister Alexander De Croo said it was up to the competition authorities to determine what conditions should apply to their approval of the acquisition. As a priority, he said, the small, virtual operators on the Base network that offer innovative subscriptions to specific market groups – companies such as Mobile Vikings – should be allowed to continue playing a competition-stimulating  role.

De Croo said he had already asked telecoms regulator BIPT to evaluate the various scenarios surrounding a sale of Base. BIPT is best placed, he said, to evaluate the impact of the sale on market competitivity and to propose measures to guarantee fair competition.

Photo by Dirk Waem/BELGA