Atlas 2022 Holdings Limited (Atlas)

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Page 1 of 8 COMPETITION COMMISSION OF INDIA Combination Registration No.C-2023/10/1059 29th November 2023 Notice under Section 6(2) of the Competition Act, 2002 filed by Atlas 2022 Holdings Limited CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 31(1) of the Competition Act, 2002 1. On 4th October 2023, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act). The notice has been filed by Atlas 2022 Holdings Limited (Atlas/Acquirer), pursuant to a board resolution dated 28th April 2023 and a relationship agreement dated 11th May 2023 signed between Emirates Telecommunications Group Company PJSC (e&) and Vodafone Group Plc. (Vodafone/Target) (Relationship Agreement) [Hereinafter, the Acquirer and Target are collectively referred to as ‘Parties’]. 2. The proposed combination relates to an acquisition by Atlas, a wholly owned subsidiary of e&, to increase shareholding/voting rights in Vodafone from previously held 14.6% to less than 25%, along with a right to appoint 2 non-executive members to the board of directors of Vodafone under the Relationship Agreement (Proposed Combination). Combination Registration No. C-2023/10/1059 Page 2 of 8 3. In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011; the Commission, vide communications dated 19.10.2023 and 10.11.2023, sought certain information(s)/ clarification(s), inter alia, relating to the activities of the Parties and the response to the same was received on 23.10.2023 and 16.11.2023. Further, certain additional information was received, vide submissions dated 31.10.2023, 02.11.2023, and 20.11.2023. Parties to the Proposed Combination 4. Atlas, a wholly owned subsidiary of e&, was incorporated on 24th February 2022 for the purposes of acquiring and holding e&’s current 14.6% interest in Vodafone. Atlas is a holding company and does not undertake any business operations either in India or elsewhere. 5. e& previously known as Etisalat Group is a telecommunications operator headquartered and based in Abu Dhabi, United Arab Emirates (UAE). It provides innovative digital solutions, smart connectivity and next-generation technologies to a variety of customer segments in 16 countries across the Middle East Asia and Africa.1 e& does not hold a licence to operate as a mobile network operator (MNO) in India. It does not have any Indian subsidiaries/ physical presence or undertake any business operations in India. In 2008, the Federal Government of the UAE transferred its 60% holding in e& to the Emirates Investment Authority (EIA), the sovereign wealth fund of the UAE, which is ultimately controlled by the UAE Federal Government. The remaining 40% of the shares are widely dispersed among other investors. 6. EIA is a sovereign wealth fund of the federal government of the UAE, established in 2007. The board of directors of EIA report to the Cabinet of the Federal Government of the UAE, and the chairman of the board is His Highness Sheikh Mansour Bin Zayed Al Nahyan, the current Vice President and deputy Prime Minister of the UAE. He is also a member of the UAE Royal Family and brother of the current president of the UAE. EIA 1e& provides telecommunications services in Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Côte d’Ivoire, Egypt, Gabon, Mali, Mauritania, Morocco, Niger, Pakistan, Saudi Arabia, Togo and the UAE. Combination Registration No. C-2023/10/1059 Page 3 of 8 has a shareholding of 50.12% in Emirates Integrated Telecommunications Company P.J.S.C (du), a telecom operator in the UAE. 7. Vodafone is the ultimate holding company of all the companies within its group. Vodafone is a British telecommunications operator, listed on the London Stock Exchange and the Nasdaq. In India, Vodafone is active in the telecommunications sector through Vodafone Idea Limited (VI India) and its step-down subsidiaries. Vodafone holds 32.29% stake in VI India. VI India is listed on both the Bombay Stock Exchange and the National Stock Exchange. Further, VI India holds a unified license, licenses for National Long Distance, International Long Distance, Internet Service Provider, and Infrastructure provider category- I, and offers mobile telephony services; broadband services; content and digital offerings; and various Value Add Services (VAS) such as entertainment services; voice and Short Message Service (SMS) based services such as caller tunes, etc.; and utility services such as missed call alerts, etc., in all 22 service areas of India. Identification and Assessment of Overlaps 8. It is submitted by the Acquirer that there are no horizontal or vertical relationships between EIA, e& and Vodafone (and their respective affiliates). Complementary Relationships 9. With respect to complementary relationships, it is stated in the notice that e& and du offer interconnection services and international roaming services through arm’s length commercial contracts with MNOs operating in India, including VI India. While e& has bilateral interconnection and international roaming agreements with VI India for Afghanistan, Egypt, United Arab Emirates (UAE), Morocco and the Kingdom of Saudi Arabia (Relevant Countries), du has a bilateral international roaming and interconnection agreement with VI India for UAE. 10. It is stated that e& considers such services to be complementary to its main business activities, i.e., the provision of retail mobile telecommunications services and retail fixed telecommunications services in the countries where e&/ du is active as MNO. This is Combination Registration No. C-2023/10/1059 Page 4 of 8 because interconnection services and international roaming services are used together with retail mobile telecommunications services and, similarly, interconnection services are used together with retail fixed telecommunications services to enhance the overall telecommunications services provided to the customer allowing them to connect with customers of other MNOs or access telecommunications services when travelling abroad. Moreover, both the international roaming agreements and the interconnection agreements that e& and du have with other Indian MNOs are bilateral in nature. I. Complementary Relationship: e&/ du as a customer of VI India 11. Wholesale international roaming services- The Acquirer has submitted that e&’s customers of retail mobile telecommunication services in the Relevant Countries/du’s customers of retail mobile telecommunication services in UAE rely on the telecommunication networks of VI India (or other Indian MNOs) to access such services when travelling to India. Therefore, the Parties exhibit complementary relationship in the following relevant markets: (a) the market for retail mobile telecommunications services in the Relevant Countries (through e&); (b) the market for retail mobile telecommunications services in UAE (through du); and (c) the market for wholesale international roaming services in India (through VI India). 12. Interconnection services- It is submitted that e&’s customers of retail fixed telecommunication services and retail mobile telecommunication services in the Relevant Countries/du’s customers of retail fixed telecommunication services and retail mobile telecommunication services in UAE, rely on VI India (or other Indian MNOs) to provide wholesale fixed call termination services and wholesale mobile interconnection services to be able to make a call/send an SMS to a customer of VI India (or customers of other Indian MNOs) in India. Therefore, the Parties exhibit complementary relationship in the following relevant markets: (a) the market for retail fixed telecommunications services in the Relevant Countries (through e&); (b) the market for retail fixed telecommunications services in the UAE (through du); (c) the market for retail mobile telecommunications services in the Relevant Countries (through e&); (d) the market for retail mobile telecommunications services in the UAE (through du); (e) the market for wholesale fixed Combination Registration No. C-2023/10/1059 Page 5 of 8 call termination services in India (through VI India) and (f) the market for wholesale mobile interconnection services in India (through VI India). II. Complementary Relationship: VI India as a customer of e&/du 13. Wholesale international roaming services: The Acquirer has submitted that VI India’s customers of retail mobile telecommunication services in India rely on the telecommunication networks of e& (or other non-Indian MNOs) when travelling to the Relevant Countries/du when travelling to the UAE to access such services. Therefore, the Parties exhibit complementary relationship in the following relevant markets: (a) the market for retail mobile telecommunications services in India (through VI India); (b) the market for wholesale international roaming services in the Relevant Countries (through e&); and (c) the market for wholesale international roaming services in the UAE (through du). 14. Interconnection services: The Acquirer has submitted that VI India’s customers of retail fixed telecommunication services and retail mobile telecommunication services in India rely on e& (or other non-Indian MNOs) in the Relevant Countries/ du in UAE to provide wholesale fixed call termination services and wholesale mobile interconnection services to be able to make a call/send an SMS to customers of e& (or customers of other non-Indian MNOs) in the Relevant Countries/du in the UAE. Therefore, the Parties exhibit complementary relationship in the following relevant markets: (a) the market for retail fixed telecommunications services in India (through VI India); (b) the market for retail mobile telecommunications services in India(through VI India); (c) the market for wholesale fixed call termination services in the Relevant Countries (through e&); (d) the market for wholesale fixed call termination services in the UAE (through du); (e) the market for wholesale mobile interconnection services in the Relevant Countries (through e&); (f) the market for wholesale mobile interconnection services in the UAE (through du). (Collectively, markets mentioned above are referred to as ‘Relevant Markets’) 15. The Commission decided to assess the Proposed Combination in the relevant markets identified by the Parties. However, exact delineation of the relevant market has been left open. Combination Registration No. C-2023/10/1059 Page 6 of 8 Assessment of Complementary Relationships 16. It is stated in the notice that the Proposed Combination is an investment by e& in Vodafone and not VI India. e& is not acquiring any direct or indirect control or any affirmative veto rights in VI India, which is a publicly listed company, having its independent governance and management structure and the Government of India as its single largest shareholder. 17. Additionally, it is submitted that e& Nominees on the board of Vodafone will not be able to influence VI India’s business operations in any manner as, under the Relationship Agreement, e&’s Nominees shall recuse themselves from any meetings regarding Conflict Matters2 and shall not receive, or be entitled to receive, any information on such matters, and shall not be entitled to attend, be counted in the quorum, participate in discussions at or voting on resolutions in any board or committee proceedings relating to any Conflict Matter. I. Complementary Relationship: e&/ du as a customer of VI India Wholesale international roaming services 18. Based on the submissions of the Acquirer, it is noted that even though VI India is present in all 22 service circles in India, both e& du have entered into roaming agreements with other Indian MNOs in order to secure comprehensive, nationwide coverage for its travelling customers. Further, there are other competitors such as Jio, Bharti Airtel, MTNL and BSNL present in India which can provide wholesale international roaming services to non-Indian MNOs so that their customers can continue to access telecommunications services when 2 e& Nominees are prohibited from attending, being counted in the quorum, participating in discussions at or voting on resolutions, or receiving any information at or in connection with, any part of a Vodafone board or committee meeting where: (a) The subject matter of the discussions or resolutions relates to: (i) the relationship between Vodafone (or any member of its group, which would include VI India) and e& (or any member of its group); (ii) any transaction or arrangement between any member of the Vodafone group and any member of the e& group; (iii) any business segment or geographical market in which Vodafone (or any member of its group) and e& (or its affiliates) are actual or potential competitors; (iv) any transaction or arrangement which e& and Vodafone may reasonably be expected to be interested in pursuing; or (v) any takeover offer by a third party under the Companies Act 2006 (following which Vodafone would be entitled to terminate the Relationship Agreement); or (b) A Nominee’s participation would reasonably be expected to give rise to an actual or potential conflict of interests for such Nominee (as determined by the independent non-executive directors of Vodafone, acting reasonably and in good faith) which is not authorised by Vodafone’s board (excluding the relevant Nominee(s)) in accordance with Applicable Law and Vodafone’s internal policy on Directors’ conflicts of interests.(together, referred as Conflict Matters) Combination Registration No. C-2023/10/1059 Page 7 of 8 travelling abroad to India. Therefore, e&/du do not appear to have the incentive to stop procuring international roaming services from other Indian MNOs. Interconnection services 19. Based on the submissions of the Acquirer, it is noted that VI India’s market share in the market for retail fixed telecommunications market and retail mobile telecommunications market in India in FY 2022-23 was [0-5]% and [20-25]% respectively. The Acquirer has submitted that in the event of any potential exclusivity between e&/du on one hand and VI India on the other for interconnection services, e&’s/du’s customers would not be able to make calls to [95-100] % of fixed line users in India and make calls or send SMSs to [75- 80]% of the mobile users in India. Therefore, e&/du do not appear to have incentive to stop procuring interconnection services from other Indian MNOs. II. Complementary Relationship: VI India as a customer of e&/ du Wholesale international roaming services 20. Based on the submissions of the Parties, it is noted that the market shares of e& are the range of [60-65]% in UAE; [35-40%] in Morocco, [25-30%] in Egypt, [35-40%] in Afghanistan and [25-30%] in Saudi Arabia and the market share of du is in the range of [35- 40]% in the UAE. Also, there are other players present in the Relevant Countries providing roaming services to customers of Indian MNOs. Given the foregoing, there is not likely to be foreclosure of Indian MNOs or their customers in the Relevant Countries. Interconnection services 21. Based on the submissions of the Acquirer, it is noted that VI India’s market share in the market for retail fixed telecommunications market and retail mobile telecommunications market in India in FY 2022-23 was [0-5]% and [20-25]% respectively. The Acquirer has submitted that there is no incentive for e&/du to stop providing interconnection services or degrade the quality of services provided to other Indian MNOs or provide preferential treatment to VI India, as e&’s/du’s interconnection agreements with Indian MNOs are bilateral in nature; if e&/du were to stop the termination of calls/ SMSs from customers of Indian MNOs on their network, e&’s/du’s customers would also not be able to make Combination Registration No. C-2023/10/1059 Page 8 of 8 calls to [95-100]% of the fixed line users in India and make calls or send SMSs to [75-80]% of the mobile users in India. 22. Considering the material on record, including details provided in the notice given under sub-section (2) of Section 6 of the Act and assessment of the combination based on the factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India in any of the relevant market(s), and therefore, the Commission approves the same under Section 31(1) of the Act. 23. This order may stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect. 24. The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 25. The Secretary is directed to communicate to the Acquirer accordingly.