The European Commission (EC) has launched an in-depth probe into UAE telco e&'s proposed acquisition of PPF Telecom Group's operations in Europe.

The deal would see e&, formerly Etisalat, acquire sole control of PPF Telecom, bar its business in Czechia.

Earlier this week, the EC said it has opened an investigation into the deal, based on concerns e& may be benefiting from distortive foreign subsidies.

“The Commission has concerns that such subsidies may have improved e&'s capacity to perform the acquisition as well as the competitive position of the merged entity in the EU going forward, notably by improving its capacity to finance its EU activities at preferential terms," it said in a statement.

"The alleged subsidies notably take the form of an unlimited guarantee from the UAE and a loan from UAE-controlled banks directly facilitating the transaction."

After reports of the telco's interest surfaced over the summer, e& announced the deal to buy a stake of 50 percent plus one share stake in PPF last August. The proposed acquisition covers assets in Bulgaria, Hungary, Serbia, and Slovakia.

The investigation by the EC is the first of its kind since the Commission introduced regulations for the economic bloc in July 2023, aimed to prevent market distortion that provides an unfair advantage to companies over other businesses operating in the region.

The EC has until October 15 to conclude its decision on the acquisition, where it will either clear the deal if concessions are offered or block it.

e& has said that it will cooperate with the EC, and is working towards closing the transaction by the end of the year.

The telco has slowly built a presence in Europe, growing its stake in Vodafone Group to 14.6 percent.

It was reported last month that e& is lining up a potential acquisition of eastern European carrier United Group BV.