The rejection by a Dutch court of cable wholesale regulation is unlikely to be followed by Belgium, according to analysts at Jefferies, with the two countries’ respective regulators making different assumptions in implementing the rules governing access to cable networks.
Analysing the likely performance of Belgian telcos Proximus and Orange Belgium in light of the Coronavirus crisis, Jefferies said: “We do not believe the rejection of cable wholesale regulation by a senior Dutch court has relevance for Belgium. In a nutshell, the Dutch regulator used a ‘joint dominance’ logic, while the Belgian regulation is based on dominance in separately defined markets.”
The analysis follows the decision by the Dutch CBb business appeals tribunal to overturn a previously regulatory ruling in the Netherlands that required Liberty Global-Vodafone JV VodafoneZiggo to open up its cable access network to third-party providers.
Dutch regulator the ACM had ruled in 2018 that VodafoneZiggo must give access to other internet and TV providers to its network, having argued that VodafoneZiggo and KPN, the leading Dutch telco, together had a market share that gave them an incentive to tacitly act in concert to prevent rivals from gaining a foothold in the market.
Orange Belgium expects a final decision on pricing for cable wholesale by the second quarter, following the Belgian regulator’s decision to force cable to open up access to its networks.
Jefferies said that it expected regulator BIPT to submit its decision to the EC imminently, with the EC given a month to respond.
Jefferies meanwhile said that it expected Coronavirus to have a “limited” impact on telco cash flows in Belgium, with the “on the margin” impact of limiting Proximus’s churn while slowing down Orange Belgium’s fixed-mobile convergence project.
The analysts nevertheless marked Proximus as ‘underperform’ on the grounds that increased capex would weight on free cashflow. Orange was given a ‘buy’ rating despite the short-term impact of Coronavirus on sales.
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