CAIW: now prey for cable operators or Vodafone?

Thursday 12 April 2012 | 08:36 CET | Market Commentary
KPN's proposed acquisition of cable/FTTH service provider CAIW will not go ahead, due to objections from the Dutch cartel authority NMa over the combined companies' market shares in fixed telephony, broadband and TV in CAIW’s coverage area (mainly the Westland region). 

KPN agreed in May 2011 to acquire CAIW from fibre infrastructure operator CIF, while CIF would remain the owner of the underlying infrastructure (coax/FTTH). As a condition to the transaction, KPN would need to open its own infrastructure for third parties.

In the CIF press release, the company announced that no other possible buyers will be sought in the short term. This was reiterated by Martijn Visser, a spokesman for CIF. He told Telecompaper that CIF will hold on to CAIW in the medium term (2-5 years) and hopes to return its focus to its activities, after a year of uncertainty over whether the acquisition would be approved or not.

The end of the acquisition process offers chances to the two largest Dutch cable operators, Ziggo and UPC, to try and buy CAIW. They will not face objections from the NMa over regional market shares. They could have a problem with the open network condition that CIF is likely to add to the acquisition, as CAIW already has opened its network to a smaller cable operator from the Gouda region, Rekam, to offer its own TV services on CAIW’s infrastructure.

Recent history suggests this condition could be an obstacle for both cable operators. When Dutch telecommunications regulator Opta tried to force all cable operators to open their networks for third parties to offer analogue and digital TV services, its efforts were thwarted in a successful court appeal by the operators. In the end, Opta decided to abandon its proposals to regulate the TV market.

Another possible candidate for acquiring CAIW is Vodafone Netherlands, which has been expanding its focus from mobile-only to the fixed market as well. Its entrance on the fixed market mainly focuses on business services, with the acquisitions of TNF (2009) and Telespectrum (April 2012). Vodafone also entered the consumer market, launching triple-play packages over the FTTH network of Reggefiber in September 2011. An acquisition of CAIW would boost this strategy, as CIF is currently upgrading the coax infrastructure in CAIW’s coverage area to FTTH. The only obstacle for Vodafone could be that CAIW is service provider as well as operator on the active layer of the network, in contrast with Vodafone’s own strategy to be only a service provider.

The acquisition of CAIW would also offer Tele2 and T-Mobile Online the opportunity to make their long-anticipated entrance on the FTTH market, enabling both providers to reverse their recent losses in broadband market share due to shrinking DSL customer bases. 

With the CAIW acquisition falling through, a period or rumours and speculation about the future of CAIW will start, despite CIF’s announcement that a sale is not forthcoming. If a good offer is made without too many obstacles, CAIW could still change hands rather quickly.

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