Global Insight Perspective | |
Significance | Citing a TV interview with Piotr Majchrzak, MNI's chief executive, Reuters reports that the Polish fixed-line alternative has offered to buy a 31.3% stake in Netia, its larger rival, from Novator, an Icelandic investment firm. |
Implications | Novator has had hard time during the financial crisis and is under heavy pressure to divest its assets, which in Poland also include Play, the fourth-biggest MNO. |
Outlook | IHS Global Insight believes that the cash-strapped Novator will exit both Netia and Play, which is likely to mean good bargains for the winning bidders. |
Polish telecoms firm MNI Telecom has placed a bid for the 31.3% stake that Novator, an Icelandic investment fund, owns in Netia, Poland's largest alternative telco, reports Reuters. MNI chief executive Piotr Majchrzak was quoted as saying in an interview with TVN CNBC, a Polish business channel, that his company is "surprised by Netia's low margins" and that "the goal of the transaction would be to double its EBITDA margin and make it even bigger in the future." Majchrzak did not reveal any financial details of the offer.
Outlook and Implications
Main Alternative: Netia has been the key driver for consolidation on the Polish fixed-line market, having bought a number of regional rivals—as well as one nationwide operator, Tele2—in the course of this and the past year (see Poland: 8 September 2008: Netia's Tele2 Deal Given Anti-Trust Approval and Poland: 24 November 2008: Netia Acquires Another Regional ISP). The acquisitions, especially the purchase of Tele2, have allowed the operator to revise its earlier strategy—which had it that after the non-organic expansion it would start focusing on the margins, turning the business profitable in 2011—and promise the first profits during 2010. At end-September, Netia posted quarterly revenue of 271.2 million zlotys (US$90.5 million), which was 41% higher year-on-year (y/y) and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 43.9 million zlotys, up 21% y/y; the EBITDA margin was 16.2%, which compares with 17.6% in September 2007. The company expects to exceed 400,000 broadband subscribers and 1.080 voice subscribers by end-2008 (see Poland: 13 November 2008: Netia's Q3 Revenue Up 41% on the Back of Acquisitions).
End of an Icelandic Saga? Out of the global financial crisis, things have moved fast for Novator—and to an unfortunate direction. In October, the cash-strapped investor was forced to sell its stake in Finland's Elisa in a rush, which fuelled rumours that it would move towards exit also in Poland, where it besides Netia owns Play, the market's fourth-largest, generally well-performing mobile operator (see Finland: 13 October 2008: Novator's Elisa Stake Sold to Finnish Insurance Company). The first speculation concerning Play emerged in September, when a Polish business newspaper wrote that TeliaSonera would be interested in buying it, whereas in the case of Netia the exit plans came out just over a week ago (see Poland – Europe: 2 September 2008: TeliaSonera in Talks to Buy Play from Novator—Report, and Poland: 11 December 2008: Polish Investment Fund NFI Magna Interested in Netia—Report). MNI Telecom's fixed-line carrier—MNI—reports some 60,000 voice subscribers, "several thousand" broadband subscribers, and has also an MVNO offering; the company is listed on the Warsaw Stock Exchange with, according to Reuters, market capitalisation of some US$62 million, nearly five times smaller than Netia's US$311 million. Besides MNI and a couple of financial investors, Cyfrowy Polsat—another Polish alternative—has been named as a potential bidder by local media. IHS Global Insight expects Novator to sell both Netia and Play in the short term, the first one of them possibly in the first quarter of 2009.