EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Decision on the implementation of the commitments - Purchaser approval

Date: 24/08/2021

EUROPEAN COMMISSION

Brussels, 24.08.2021 C(2021) 6330 final

PUBLIC VERSION

In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description.

Orange S.A. 111, Quai du Président Roosevelt 92130 Issy-les-Moulineaux France

Dear Sir or Madam,

1. FACTS AND PROCEDURE

(1) By decision of 28 July 2021 (the “Decision”) based on Article 6(1)(b) in connection with Article 6(2), the Commission declared the operation by which Orange S.A. (“Orange”, France) acquired sole control of the whole of Telekom Romania Communications S.A. (“TKR”, Romania) by way of purchase of shares (the “Transaction”) compatible with the internal market subject to conditions and obligations (the “Commitments”).

(2) Pre-Transaction, TKR was solely controlled by Deutsche Telekom AG (“DT”) through DT’s solely controlled subsidiary Hellenic Telecommunications Organizations S.A. (“OTE”).

(3) Telekom Romania Mobile Communications S.A. (“TRMC”) is a Romanian mobile network operator that was pre-Transaction solely controlled by DT. Two separate DT subsidiaries held stakes in TRMC as follows: (i) OTE held 70% of the shares in TRMC; and (ii) TKR held 30% of the shares in TRMC (the “TRMC Minority Stake”).

Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË

Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.

Stake. As a result of the Transaction as notified, Orange would acquire the TRMC Minority Stake.

(4) The Decision found that the Transaction, as originally notified, would raise serious doubts as to its compatibility with the internal market as regards the market for retail mobile telecommunication services in Romania. In order to remove such serious doubts, the Commitments provide for the divestiture of the TRMC Minority Stake to a suitable purchaser, to be approved by the Commission in accordance with the criteria set out in the Commitments (the “Purchaser”). As noted in the Decision, Orange identified OTE as a purchaser of the TRMC Minority Stake.

(5) Under the Commitments, Orange commits not to implement the Transaction before: (a) TKR has entered into a final binding sale and purchase agreement with the Purchaser, subject to the Purchaser being approved by the Commission as acquirer, and the Commission approving the terms of sale in accordance with the Commitments; and (b) closing of the divestment of the TRMC Minority Stake to OTE.

(6) On the basis of the Commitments, and in accordance with the Remedies Notice, the Commission assessed and market-tested the suitability of the Commitments to remove serious doubts in this case. The market test also covered OTE’s suitability as a purchaser of the TRMC Minority Stake. In the Decision, the Commission noted that the market test confirmed OTE’s suitability as a purchaser of the TRMC’s minority stake, while clarifying that the Commission will assess subsequently, in a separate decision, the suitability of OTE as purchaser of the TRMC Minority Stake and the compatibility of the sale and purchase agreement between TKR and OTE with the Commitments.

(7) On 4 August 2021, TKR and OTE entered into a share sale and purchase agreement whereby OTE agreed to purchase the TRMC Minority Stake (the “Proposed Agreement”). By letter of 4 August 2021 to the Commission, Orange proposed OTE for approval by the Commission as purchaser of the TRMC Minority Stake and submitted the Proposed Agreement.

(8) On 5 August 2021, Advolis, société par actions simplifiée (the “Monitoring Trustee”) submitted to the Commission its assessment of OTE’s suitability as a purchaser and of whether the TRMC Minority Stake is being sold in a manner consistent with the Commitments (the “Reasoned Opinion”).

2. ASSESSMENT OF THE PROPOSED PURCHASER

(9) As set out in section D of the Commitments, in order to be approved by the Commission, the purchaser of the TRMC Minority Stake must fulfil the following criteria:

Commission Notice on remedies acceptable under Council Regulation (EEC) No 139/2004 and under Commission Regulation (EC) No 802/2004, OJ C 267, 22.10.2008, p. 1-27.

Commission decision of 28 July 2021 in case M.10153 – Orange/Telekom Romania Communications, paragraphs 544 to 548.

(a) the Purchaser shall be independent of and unconnected to Orange and its Affiliated Undertakings (this being assessed having regard to the situation following the divestiture of the TRMC Minority Stake);

(b) the Purchaser shall have the financial resources, proven expertise and incentive to operate the TRMC Minority Stake;

(c) the acquisition of the TRMC Minority Stake by the purchaser must neither be likely to create, in light of the information available to the Commission, prima facie competition concerns nor give rise to a risk that the implementation of the Commitments will be delayed. In particular, the Purchaser must reasonably be expected to obtain all necessary approvals from the relevant regulatory authorities for the acquisition of the TRMC Minority Stake.

(10) The remainder of this section provides a short description of the Purchaser and an assessment of its suitability in view of these criteria.

2.1. Description of the Proposed Purchaser

(11) OTE is the largest technology company in Greece. It is one of the top three listed companies with respect to capitalization, in the Athens Stock Exchange. DT holds sole control over OTE and owns 48.29% of its share capital. The Greek State holds 3 (directly and indirectly) 5.36% of OTE’s share capital. OTE Group employs approximately 11 500 people in Greece and approximately 16 000 people in total.

2.2. Independence from Orange

(12) OTE does not have any share or any direct or indirect ownership in Orange or any of the undertakings controlled by Orange in the sense of Article 3 of Council Regulation (EC) No 139/2004 (the “Affiliated Undertakings”) and vice versa. In addition, no director of Orange or any of its Affiliated Undertakings is on the board of OTE (or of its controlling shareholders) and vice versa.

(13) In the Reasoned Opinion, the Monitoring Trustee concludes that OTE is independent from Orange.

(14) In view of the above, the Commission considers that OTE is independent of and unconnected to Orange and its Affiliated Undertakings.

2.3. Financial resources, proven expertise and incentive to operate the TRMC Minority Stake

(15) In 2020, OTE reported revenues of EUR […]. OTE’s credit rating by Standard & Poor’s is […] and it reported cash reserves of EUR […] as of the end of Q1 2021. OTE operates the largest mobile operator in Greece, with 2020 revenues of EUR […] and approximately […] mobile subscribers.

(16) Furthermore, OTE belongs to the Deutsche Telekom Group, one of the largest telecommunications groups in the world, encompassing […] mobile customers, […] fixed-network lines and […] broadband lines. The Deutsche Telekom Group is present in more than 50 countries, with over 226 300 employees throughout the world and an overall revenue of EUR […] in 2020.

The DT and Greek State shareholding levels in OTE as of 30 July 2021. See Reasoned Opinion, paragraph 5.1.1.

(17) OTE currently holds 70% of the share capital of and sole control of TRMC. In 2018, […], while overall, it has invested over EUR […] in TRMC.

(18) In the Reasoned Opinion, the Monitoring Trustee concludes that OTE has sufficient financial resources, proven expertise, and incentive to operate the TRMC Minority Stake. In particular, the Monitoring Trustee notes that OTE is the largest telecommunication operator in Greece, enjoys a robust financial situation with limited debt (relative to its EBITDA), and will continue to be present in Romania through its controlling stake in TRMC.

(19) In view of the above, the Commission considers that OTE has the financial resources, proven expertise and incentive to operate the TRMC Minority Stake.

2.4. Absence of prima facie competition concerns or implementation delays

(20) OTE already has sole control over TRMC (through a 70% shareholding in TRMC). Therefore, TRMC’s structure of control will not change as a result of the implementation of the Commitments. The only change will be that, pursuant to the Commitments, OTE will hold 100% of TRMC’s shares, instead of 70%. The ultimate controller of TRMC, DT, will remain unchanged.

(21) The only conditions to the closing of the Proposed Agreement are the Commission’s approval of: (i) OTE as the Purchaser; and (ii) the Proposed Agreement.

(22) Moreover, any potential risks to closing are mitigated by paragraph 4 of the Commitments, which requires transfer of the TRMC Minority Stake to the Purchaser to have closed before the Transaction can be implemented.

(23) Orange submits that there are no prior authorisations required from any competition authority for OTE’s acquisition of the TRMC Minority Stake, and no pending third party rights.

(24) In the Reasoned Opinion, the Monitoring Trustee concludes that there are no prima facie competition concerns, no risks of implementation delays and no regulatory approvals required.

(25) In view of the above, the Commission considers that the acquisition by OTE of the TRMC Minority Stake is not likely to give rise to competition concerns, nor to a risk of delaying the implementation of the Commitments (in particular due to regulatory approvals).

The Commitments required obtaining TKR’s board approval. On 17 August 2020, TKR’s board of directors approved the sale of the TRMC Minority Stake subject to the Commission making clearance of the Transaction under Council Regulation No 139/2004 (the “Merger Regulation”) conditional upon divestiture of the TRMC Minority Stake and in accordance with applicable legal provisions .

3. ASSESSMENT OF THE PROPOSED AGREEMENT

(26) Paragraph 10 of the Commitments requires that the TRMC Minority Stake be divested in a manner consistent with the Commission’s Decision and the Commitments.

(27) As mentioned under paragraph (7) above, on 4 August 2021 TKR and OTE entered into the Proposed Agreement.

(28) The Commission notes that the definition of the Shares in the Proposed Agreement corresponds to the definition of the TRMC Minority Stake in the Commitments, as it comprises the shares corresponding to TKR’s 30% shareholding in TRMC. In addition, clause 2 of the Proposed Agreement provides for the sale by TRMC and purchase by OTE of the TRMC Minority Stake subject to certain conditions, […], which the Commission does not consider to be inconsistent with the Commitments.

(29) As noted above, the only conditions to the closing of the Proposed Agreement are the Commission’s approval of: (i) OTE as suitable buyer; and (ii) the Proposed Agreement.

(30) In the Reasoned Opinion, the Monitoring Trustee concludes that the Proposed Agreement reflects Orange’s obligations as set out in the Commitments and that the TRMC Minority Stake is being sold in a manner consistent with the Commitments.

(31) In view of the above, the Commission considers that the manner in which the TRMC Minority Stake is divested under the Proposed Agreement is consistent with the terms of the Commitments and the Decision.

4. CONCLUSION

(32) On the basis of the information available regarding OTE, the Commission approves OTE as a suitable purchaser for the above-mentioned reasons.

(33) On the basis of the Proposed Agreement, the Commission further concludes that the TRMC Minority Stake is being sold in a manner consistent with the Commitments.

(34) This decision only constitutes approval of the Purchaser and of the Proposed Agreement. This decision does not constitute a confirmation that Orange has complied with its Commitments.

(35) This decision is based on Section D of the Commitments attached to the Commission Decision of 28 July 2021.

For the Commission

(Signed) Olivier GUERSENT Director-General

5In the Proposed Agreement, the Shares are defined as “[…]”. In the Commitments, the TRMC Minority Stake is defined as “[…]”.

5