- Combining T-Mobile Austria’s nationwide 4G network with #1 cable operator to create an integrated quad-play provider for broadband, mobile and fixed communications, TV- and entertainment products
- T-Mobile Austria to acquire UPC Austria for an Enterprise Value of EUR 1.9 billion
- Significant synergy potential with an estimated net present value after integration costs of EUR 0.8 billion
- Enhancing B2B position in Austria through integrated offers.
Today, T-Mobile Austria announced the acquisition of UPC Austria, the country’s leading cable provider and an indirect subsidiary of Liberty Global plc. The combined company will be an integrated provider of mobile and fixed line broadband internet, IoT (Internet of Things), mobile and fixed line telephony as well as TV- and entertainment products in Austria. The company will bring quadruple play offerings to customers and will become a strong converged challenger and alternative to the incumbent A1 Telekom Austria.
“With this acquisition Deutsche Telekom is taking another major step to realize our strategy to become a fully converged operator in our European footprint. The acquired cable network will be a perfect match with our best mobile network. It will allow customers to benefit from extended scope of services with fixed and mobile offerings from one source. We see a significant potential to accelerate growth in the Austrian market”, says Srini Gopalan, Board Member Deutsche Telekom for Europe.
The enlarged company will have approximately 6.7 million Revenue Generating Units (RGU’s, 3rd quarter 2017) thereof some 5.2 million T-Mobile Austria mobile customers. UPC Austria is the largest cable operator in Austria with coverage of 36 percent of the households in the market, mostly in urban areas. With 1.5 million RGU’s the company is #2 in the Austrian broadband market with more than 0.5 million customers and #1 in the Premium-TV market with a customer base of some 0.4 million. The combined revenue of both companies in 2017 is expected at EUR 1.2 billion based on pro-forma calculations.
The enterprise value for UPC Austria is EUR 1.9 billion. Based on IFRS accounting and adjusted for revenue and opex run rate synergies the transaction is executed with an EV/2018E EBITDA multiple of 6.8x1), in line with other industry transactions. UPC Austria’s 2018E EBITDA is expected to be approximately EUR 0.2 billion1). With a net present value of EUR 0.8 billion net of integration costs the synergies represent a meaningful value creation opportunity. The transaction valuation implies a broadly equal split of cost/capex synergies between the two parties. Cost and capex efficiencies are expected to deliver 80% of the synergies, e.g. in areas like IT and network operations. Deutsche Telekom expects the transaction to be accretive to group Free Cashflow and EPS from year one onwards.
„Broadband is the indispensable foundation for a digital Austria. It is our ambition to provide our customers, whoever and wherever they are, with the best possible seamless broadband experience for all of their needs through LTE, digital cable, fiber and future technologies like 5G“, said Andreas Bierwirth, CEO T-Mobile Austria, when announcing the planned acquisition.
1) Based on 2018 Deutsche Telekom estimate
By acquiring UPC Austria’s extensive cable network T-Mobile Austria is transforming from a mostly mobile provider to an integrated communications challenger with strong mobile and fixed infrastructure to meet growing demand for broadband internet access. Especially in urban areas the combination of fast digital cable and fiber as well as LTE will make T-Mobile Austria a strong competitor in both the consumer and businesses segments of the broadband market. To ensure broadband connectivity in rural areas T-Mobile Austria will continue its significant investment in the buildout of LTE. Together with the dense urban fiber infrastructure of UPC Austria, the fiber core network owned and operated by T-Mobile Austria will form a strong backbone for high speed mobile broadband access and for next generation network 5G.
The transaction, which is still subject to approval by the relevant competition authorities, is expected to close in the second half of 2018.
Disclaimer
This media information contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They are generally identified by the words "expect," "anticipate," "believe," "intend," "estimate," "aim," "goal," "plan," "will," "seek," "outlook" or similar expressions and include generally any information that relates to expectations or targets for revenue, adjusted EBITDA, EBITDA, or other performance measures. Forward-looking statements are based on current plans, estimates, and projections. They should therefore be considered with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control. If these risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, the actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its expectations or targets will be met. Without prejudice to existing obligations under capital market law, Deutsche Telekom does not assume any obligation to update forward-looking statements to account for new information or future events or anything else.
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