Belgacom hopes for merger clearance

Date: 22/02/1996

THE European Commission will decide next week whether to clear a 1.9-billion-ecu link-up between Belgian telephone operator Belgacom and ADSB, a consortium of US, Danish and Singapore firms.

The Commission must decide on 29 February whether to clear the alliance or deepen its inquiries with a four-month investigation.

While refusing to commit themselves publicly, officials and company representatives believe clearance will be won, even though rival firms have submitted sceptical observations on the merger to the Commission.

In mid-December, a consortium led by US regional telephone operator Ameritech Corp. won the contest to buy a 49.9&percent; stake in Belgacom.

Chicago-based Ameritech, which has a 37&percent; stake in the consortium - along with Tele Danmark and Singapore Telecom with 35&percent; and 28&percent; respectively - will concentrate on cost-cutting as well as improved marketing for new services. Above all, it will pursue an aggressive strategy for gaining a foothold in the increasingly lucrative market for business communications.

This is the focus of the observations submitted by British Telecom to DGIV, the Directorate-General for competition. BT is worried that the Ameritech-Belgacom merger is a 'pre-emptive strike'.

“Our concern is that this might help foreclose what little competition there is and it could be a pre-emptive strike against the introduction of competition later on,” said a BT official.

With the January 1998 deadline for opening up national voice telephony markets looming, Belgacom is still Belgium's only licensed operator for fixed telephony. The market could be highly attractive to international operators since Belgium is centrally placed in the EU, offering a potential springboard to the Dutch, French and German markets, and is home to many multinational companies with their huge internal communication needs.

The only competition on the horizon comes from Telenet Vlaanderen, an association of Flemish cable-TV companies with the backing of US West, which intends to offer voice telephony, along with interactive services, from 1998.