Zon’s Sonaecom Deal May Soon Have Decision on In-Depth ReviewAnabela Reis
Zon Multimedia SGPS SA’s chief financial officer said the Portuguese Competition Authority may soon decide whether to carry out a detailed review of the company’s merger with Sonaecom SGPS SA’s Optimus unit.
“It shouldn’t take many weeks to know if the deal has conditions to proceed or if there will be an in-depth investigation,” CFO Jose Pedro Pereira da Costa said in a phone interview. He warned that timing is uncertain because every request by the watchdog for more information stops the clock.
Zon, based in Lisbon, is Portugal’s biggest cable-television provider while Optimus is the country’s smallest mobile-phone operator. The combination will compete against Portugal Telecom SGPS SA and Vodafone Group Plc for cable-television, Internet and telephone clients in Portugal.
The Competition Authority has 30 working days from the notification date to decide whether to extend the review, giving it 90 working days to make a final decision. The merger was announced in December and notified to the Competition Authority in February.
“We haven’t exceeded the legal timing yet,” Pereira da Costa said.
Zon’s first-quarter net income rose 13 percent from a year earlier to 11.6 million euros ($15.3 million), the company reported last night. Revenue was almost unchanged at 214.3 million euros, beating analysts’ 212.1 million-euro average estimate.
“This set of results was a very strong delivery on the profitability front,” with international sales growth “ahead of expectations, allowing the company to beat significantly market consensus,” analysts including Pedro Oliveira at Banco BPI said in a note.
Zon shares rose 1.2 percent to 3.51 euros at 10:03 a.m. in Lisbon, taking the advance to 18 percent this year.
Revenue from Zon’s Angolan unit will offset declining sales at home amid a weak economy this year, Pereira da Costa said in the interview.
Sales of pay-TV, broadband and telephone services dropped 1.8 percent to 188.4 million euros in the first quarter. Zon’s 30 percent stake in its international pay-TV operation in Angola and Mozambique contributed 10 million euros to total revenue, a 56 percent jump from a year earlier.
The company’s financing needs are fully covered until the end of 2014, Pereira da Costa said. Zon isn’t considering issuing debt at the moment, as it wouldn’t be appropriate with the merger in progress, he said.