IHS Global Insight Perspective | |
Significance | Denmark's TDC has sold its Hungarian fixed unit Invitel to financial investor Mid Europa Partners, pending certain conditions |
Implications | TDC made its inclination to exit Invitel official in June 2008 but the financial crisis prevented it from finding a sufficient offer until now. As such, the agreement is a further signal that M&A activity in the European telecoms industry is picking up. |
Outlook | The sale is part of TDC's strategy to focus on its core operations in Danish and other Nordic markets, and we would not be surprised if the group decided to exit its remaining non-Nordic unit—Sunrise in the Switzerland—as well. As for Mid Europa Partners, which was also the buyer for TDC's assets in Austria and the Baltics, this is the second telecoms acquisition this year, following the purchase of UPC Slovenia in May. |
Denmark's incumbent, TDC, says that it has entered into a conditional agreement with investment firm Mid Europa Parners on the sale of its 64.6% stake in Invitel, a Hungarian fixed alternate.
The aggregate purchase price for the shares is approximately 54.9 million kroner (US$10.76 million), besides which TDC will also divest its shareholder loan of 254.8 million at its nominal value. The selling company expects the deal to yield 120 million kroner after tax and take place in the fourth quarter of this year. In addition to the regulatory approvals, the agreement is conditional on certain factors, including the refinancing of Invitel's debt and on Mid Europa Partners purchasing some of its bonds from the present bond owners.
Outlook and Implications
- TDC's Withdrawal to Core Markets Continues: In the first place, the Danish company put Invitel—formerly known as HTTC—officially on sale in June 2008, yet the following October it announced that the divestment process had been suspended due to unfavourable market conditions (see World – China – Hungary: 9 October 2009: Financial Turmoil Hits M&A Activity in the Telecoms Industry). Having listed Invitel among the discontinued operations in its financial reports, TDC was nevertheless clearly committed to exit the subsidiary as soon as the conditions permit, and after keeping the sale on hold for around a year it has now found a buyer. The divestment is part of TDC's strategy to focus on what is regard as its core markets—referring namely to the residential sector in Denmark, and the business sector there and other Nordic countries—and sell most of the assets elsewhere in Europe. In the course of 2007 TDC divested its fully owned Baltic subsidiary, Bité, as well as its 15% stake in the Austrian mobile provider One, and in late 2008 the company sold the 19.6% holding in Polkomtel, the largest mobile operator in Poland. After the Hungarian exit, the group's last non-Nordic business is Sunrise in Switzerland, and IHS Global Insight would not consider it too surprising if also this unit would be sold in the future (see France: 25 September 2009: France Telecom Eyes Further European Consolidation with Swiss Sunrise Deal and Denmark – Switzerland: 13 August 2009: TDC Q2 Earnings Up 4.8%, Boosted by Healthy Growth at Sunrise).
- Mid Europa Extends Presence in CEE Telecoms: The acquisition—if completed as planned—will add to the buyer's assets Hungary's largest fixed-line alternate, which also has a notable wholesale presence in the Central and Eastern European (CEE) region (see Hungary: 15 September 2009: Invitel Plans to Launch Mobile Service by End-2009—CEO). One of the leading financial investors in the region's telecoms markets, it had namely been Mid Europa Parners which acquired TDC's operations in Latvia and Lithuania (Bité), and—together with France Telecom—in Austria (One), which obviously made a sound basis for an agreement over Invitel. The purchase is second for the firm during this year, following the takeover of Liberty Global's Slovenian triple-play business in May (see Slovenia: 8 May 2009: Mid Europa Partners Acquires UPC Slovenia). The other existing telecoms holdings include SBB and Aster, cablecos in Serbia and Poland respectively.