EU clears way for UAE's e& to acquire telecom assets of Czech group PPF

European Commission says Abu Dhabi tech company has 'sufficient resources' to finalise purchase

Technology company e& is seeking complementary assets to expand into new markets. Antonie Robertson / The National

The European Commission has approved a bid by e& to buy the telecom assets of Czech investment group PPF, clearing the way for the Abu Dhabi-based technology company to expand into Europe.

The decision is the first by the EU under new rules aimed at protecting companies in the bloc from unfair overseas competition.

An investigation, which was opened in June, sought to determine if e& was unfairly benefiting from subsidies. Sovereign wealth fund Emirates Investment Authority holds a 60 per cent stake in e&.

The commission concluded that the “subsidies received by e& did not lead to actual or potential negative effects on competition in the acquisition process”.

It also said that e& has sufficient resources of its own to make the acquisition, “which reflected the target's market value, so that foreign subsidies did not alter the outcome of the acquisition process”.

The decision “marks a positive outcome to these proceedings, thanks to the parties’ co-operation and willingness to offer a comprehensive set of remedies to address our concerns”, Margrethe Vestager, the commission's executive vice president for competition, wrote.

e& did not respond to a request for comment from The National.

The decision provides "helpful guidance" on navigating the EU's new regime on competition, said Alexandra Rogers, a partner at law firm Norton Rose Fulbright. She also noted that the decision was taken well ahead of the December 4 deadline.

"A decision this far ahead of the deadline would be unusual for EU [merger regulation] reviews but might result from the nature of the remedies offered here, which do not need much in the way of implementation nor a suitable purchaser to be approved," Ms Rogers said.

Talks on a potential partnership between e& and PPF Group were first announced in July last year as part of the UAE company's push into Europe. A month later, the companies signed an agreement for e& to purchase a 50 per cent stake plus one share in PPF Group's assets in Bulgaria, Hungary, Serbia and Slovakia.

As part of that deal, e& made an upfront payment of €2.15 billion ($2.4 billion), with additional earn-out payments of up to €350 million within three years of closing if PPF Telecom exceeds certain financial targets. Balesh Sharma was retained as PPF Telecom chief executive.

At last year's Gitex Global technology exhibition in Dubai, Mikhail Gerchuk, chief executive of e& international, said the unit was “focused” on closing the PPF deal to expand into central and eastern European markets. e& already has a 15.01 per cent stake in British telecoms company Vodafone.

The company is seeking complementary assets to expand into new markets and broaden its reach to spur growth, top company executives said at the time.

Last month, its digital transformation arm, e& enterprise, completed the purchase of Turkish-based GlassHouse, allowing it to enter three markets in the Middle East and Africa region.

Besides acquisitions, e& at this year's Mobile World Congress announced a commitment of $6 billion over the next two years to boost the digital capabilities and economies of the markets it serves across three continents.

The investment pledge between this year and 2026, made to the International Telecommunication Union’s Partner2Connect Digital Coalition, will cover 16 markets.

Meanwhile, PPF Group operates in the Czech Republic as well as 25 other countries across Europe, North America, Asia and Africa, covering the financial services, telecom, media and e-commerce sectors. PPF is also active in property, biotechnology and transport products and services.