September 2014
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TVBEurope 53 Business
$12,734.9 per sub. Even when considering a per sub value on its larger broadband base of 1.6 million, the returned value of $6,377.62 remains high.
Eastern Europe Deals in eastern Europe are still some way off the volumes seen in western Europe over the last two years, representing less than 20 per cent of the total number charted by SNL Kagan. Deal values are also much lower in the region. Driving M&A activity in the region’s pay-TV market is the still highly fragmented cable sector (see Figure 3) and intense competition among multiple DTH operators, in what is a saturated pay-TV environment. Poland, which has a pay-TV penetration of 89 per cent, has more than 500 cable companies, of which only six serve more than 100,000 subscribers, while three served more than half a million. The Polish situation provides significant incentive for leading cable operators like UPC Polska, Multimedia and Vectra to consolidate. In the similarly fragmented cable market in Hungary, Magyar Telecom is also buying up many of the smaller players.
In Russia, the February 2011 acquisition of NTK has given the incumbent telco Rostelecom access to over 3.1 million Moscow households and enhanced its market position in key cities such as St Petersburg, Yekaterinburg and Novosibirsk, adding five million subscribers in total. The consolidation is also visible on the vibrant DTH market. The most high profile merger occurred when two Polish high-end satellite platforms, Cyfra+ and ‘n’, merged into one entity ‘nc+’. A similar deal took place in Czech Republic and Slovakia, where Skylink – the platform operating in both countries – went into the hands of M7 Group – the owner of CS Link, another satellite operator active in Czech Republic and Slovakia. In the eastern European mobile market, Deutsche Telekom continues to be an active buyer. In February 2014, it acquired the remaining 40 per cent shares of T-Mobile Czech Republic. Telekom also offers pay-TV in a couple of other countries in the region, as bundling of services is now very common. In line with that trend, the leading Polish DTH platform, Cyfrowy Polsat, acquired mobile operator Polkomtel that serves 14 million customers.
More to come
More deals in 2014 are to be expected and a significant volume of M&A activity going forward is much more likely to materialise in the more fragmented east European markets, while larger value deals take hold in western Europe. Greek satellite pay-TV operator Nova, owned by ISP Forthnet, is being eyed by Vodafone and Wind
Hellas jointly, and incumbent Greek telco OTE. In France, IPTV operator Bouygues Telecom has caught the eye of Iliad after the former’s failed bid to merge with Vivendi-owned SFR, while in Spain, Orange has reported on its need to consolidate
its position in the market and a bid for ISP Jazztel is the most likely move. Recovering economies, credit availability, healthier company financials and higher valuations are underlining much of the activity in the sector.
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