E& (formerly Emirates Telecommunications Group), the United Arab Emirates' largest telecommunications provider, has assured investors that a European Commission probe into its acquisition of Portugal Telecom's (PT) holding in Maroc Telecom (IAM) is a standard procedure. E& finalized the acquisition in February 2022, gaining a controlling stake in Maroc Telecom, a leading African telecom operator.
The EU Commission reportedly opened an investigation in May 2024 to assess whether the deal could potentially harm competition within the European Union's telecommunications market. E& maintains that the acquisition solely strengthens its presence in Africa and does not impact the European market.
"We are confident that the EU Commission's review is a procedural step and that the acquisition will be approved, " said a spokesperson for E& in a statement. "The deal with PT strengthens our position as a key player in Africa's vibrant telecoms sector and has no bearing on the European market. "
Analysts, however, expressed some concern regarding the potential implications of the investigation. "While E&'s stance is understandable, the EU Commission might take a broader view, " said Kamal Hassan, a telecommunications analyst at Dubai-based Arqaam Capital. "The Commission might be concerned about the potential for E& to leverage its combined market share in Africa and Europe to influence pricing or restrict access. "
The investigation adds a layer of complexity to E&'s ambitious expansion plans in Africa. The company views Africa as a key growth market, with a large and young population and a rapidly growing mobile phone penetration rate. E&'s acquisition of Maroc Telecom was seen as a significant step in its plan to become a leading pan-African telecom operator.
The EU Commission's investigation could potentially delay the full integration of Maroc Telecom into E&'s operations. The two companies might be required to hold off on certain aspects of their integration plans until the Commission reaches a decision. This could impact E&'s ability to fully capitalize on the synergies created by the merger.
E&'s stock price dipped slightly on the news of the EU probe, reflecting investor uncertainty. However, the company's overall outlook for the African market remains positive. E& is expected to continue its investments in Africa, regardless of the EU Commission's decision. The company is betting on the long-term growth potential of the African telecoms market and is confident that its Maroc Telecom acquisition will ultimately prove to be a strategic win.