The Infocomm Development Authority of Singapore (IDA) has approved CityNet’s proposed acquisition of OpenNet, and provided the assurance that there will be stronger safeguards in place to mitigate concerns over the potential impact on competition.

OpenNet is the designated Network Company (NetCo) responsible for the design, build and operation of the passive infrastructure layer of the Next Generation Nationwide Broadband Network (Next Gen NBN). On 22 August 2013, it submitted a consolidated application, together with CityNet, NetLink Trust and SingTel, for CityNet to fully acquire OpenNet.

NetLink Trust is currently fully-owned by SingTel. Under the terms of IDA’s approval, however, SingTel will have to pare down its stake in NetLink to 25 per cent or less by April 2018. CityNet is the Trustee-Manager of NetLink Trust, and has an independent majority on its board.

Announcing its approval of the acquisition on 21 November, IDA said it will take place in two phases. In Phase 1, the assets and business of OpenNet will be transferred to NetLink Trust within 12 months after the acquisition is completed.

SingTel will also relinquish its role as the NetCo’s key subcontractor, and relevant personnel, skills and expertise will be transferred to NetLink Trust, to allow CityNet to boost its operational capabilities.

In Phase 2, CityNet will roll out the infrastructure, maintain the systems and provide the services previously undertaken by OpenNet. To enhance CityNet’s independence, SingTel will divest more than 75 per cent of its holdings in NetLink Trust by April 2018.

In approving the acquisition, IDA took into consideration feedback given during a public consultation that was conducted between August and September this year.

Mr Leong Keng Thai, IDA’s Deputy Chief Executive and Director-General (Telecoms and Post), said IDA agreed with the comments from the industry and public that stronger safeguards were needed to better mitigate potential competition concerns.  One of its priorities was to ensure that the acquisition would not significantly change the Next Gen NBN market environment and reduce competition in the market or harm the public interest.

It also wanted to ensure that key regulatory requirements specific to the Next Gen NBN would continue to be upheld. One of these requirements was Effective Open Access, which refers to non-discriminatory and non-exclusive access to all segments of the network through structural and/or operational separation and interconnection requirements. IDA also received an undertaking that CityNet and OpenNet would continue to comply with IDA-regulated wholesale prices that are set out in interconnection offers, as well as requirements for non-discriminatory service provisioning and quality of service standards.