The antitrust watchdog of Brazil, AT&T Inc. (NYSE:T), has said that the telecommunication giant’s proposed acquisition of Time Warner Inc (NYSE:TWX) will hamper competition. This has consequently thrown into the mix a complication which could delay the process of approval for the deal. According to Cade’s recommendations the deal should be rejected in its current presentation unless changes are made.
These changes include the sales of assets though the antitrust watchdog did not specify the properties that would call for divesting. The board of Cade is expected to give a final ruling by November 22 but the deadline can also be extended by three months.
Television powerhouse
The acquisition is seeking to merge the owner of such media properties as HBO and Warner Bros with one of the largest telecommunications providers in the world. It would also result in a television powerhouse in South America’s largest economy which could run counter to a Brazilian law prohibiting providers of pay television from owning programming content.
This is because with AT&T’s acquisition of DirecTV two years ago at a price of $48.5 billion, it also ended up granting the telecommunications giant a 93% shareholding in Sky Brasil.
“Both Sky and Time Warner have significant market power,” said Cade in a statement.
Consumer benefit
AT&T, however, disagreed with Cade’s opinion and said that its acquisition of Time Warner would actually be a benefit to consumers since it would present them with more options and benefits. According to a spokesperson for the telecommunications giant, Larry Solomon, AT&T believes the deal will be closed by the end of the year.
The spokesman added that both Time Warner and AT&T would cooperate with Cade in order to work out any outstanding issues with a view to promptly getting the deal approved.
By mid this year the number of subscribers that Sky Brasil had was 5.5 million. That would give the pay television provider a value of $5 billion based on valuations of other providers of pay television. So far the deal has been approved in 16 countries.
On Tuesday shares of AT&T Inc rose by 1.06% to close the day at $37.98.
