Widgetized Section

Go to Admin » Appearance » Widgets » and move Gabfire Widget: Social into that MastheadOverlay zone

Tele Columbus acquires PrimaCom for €711m

In a further consolidation of the German broadband cable sector Tele Columbus Group, the third largest German cable network operator, has entered into an agreement to acquire PrimaCom Holding GmbH, the fourth largest German cable network operator, for a total consideration of €711 million on a cash and debt free basis.

The combination of two of the leading German operators will result in a strong number three player in the German cable market bringing together 2.8 million homes connected and two well-established Housing Association customer portfolios on one platform. Transaction closing is expected on 31 July 2015.

With the acquisition of PrimaCom, Tele Columbus says it is successfully driving the consolidation of the German cable market and underlining its leading role in this process. The combination of the two biggest German medium-sized providers is pushing competition in the Internet and Telephony and Premium TV sector. The new combined company offers attractive growth potential and enables the company to realise scale efficiencies across the combined customer and network base. The combination of both companies allows the acceleration in the development and technological innovation of new and existing products in the interest of our partners and customers.

Ronny Verhelst, CEO of Tele Columbus said: “This is a transformational transaction for Tele Columbus, strengthening our position as the number three player in the German cable market. Strategically and economically, this is a highly logical combination with significant network overlap between the two businesses and complimentary Housing Association customer bases. PrimaCom has shown impressive financial and operational performance over recent years and we look forward to further successes going forward.”

Joachim Grendel, CEO of PrimaCom said: “Combining Tele Columbus and PrimaCom will build an excellent basis for the future competition with the global media- and telecommunications corporates. This merger will be to the benefit not only of consumers and our partners in the housing industry, but also of Germany as a media and high tech country.”

PrimaCom owns and runs a proprietary and high-performance hybrid fibre coax (HFC) network providing telecommunications and cable TV services to c. 1.2 million homes connected. The company is an established player in the German telecommunications market as a nationwide provider with a regional focus. In 2014, PrimaCom acquired cable network operator Deutsche Telekabel GmbH with c. 270k homes connected and generated total revenues of €132 million and adjusted EBITDA of €55 million, resulting in a margin of 42 per cent. PrimaCom currently employs c. 450 people, with corporate headquarters in Leipzig.

The combination will bring together c. 2.8 million homes connected on one platform, with enhanced focus on Tele Columbus’s core Eastern German regions as well as key Western regions such as Baden-Wuerttemberg, Hamburg, Hesse and North Rhine-Westphalia. Tele Columbus and PrimaCom have 56 per cent and 57 per cent of homes connected that are two-way upgraded and provided with own signals via independent networks respectively. Both companies have investment programs designed to increase migration to own signal-delivery and increase two-way upgraded homes, which fits with Tele Columbus’s strategy to grow the percentage of households two-way upgraded and connected to Tele Columbus’s own network.

The acquisition of PrimaCom will be financed through a combination of cash on balance sheet, a fully underwritten financing including both a senior and junior tranche and a €125 million equity bridge loan. The transaction does not need regulatory approval and is not subject to merger control review.

Grendel suggested in May 2015 that PrimaCom company would take a leading role in market consolidation, arguing that scale is essential in cable business. Grendel made his comments during a panel discussion of the Telecom Executive Circle in Frankfurt, suggesting there will only be a handful of operators in the future. “Cable is a scale business; we will in five years see significantly fewer providers in the market than today,” he declared, drawing attention to cable’s Internet bandwidth advantages.


You must be logged in to post a comment Login