Deutsche Telekom acquires GTS from private equity companies
Deutsche Telekom said it would be purchasing GTS Central Europe from private equity companies in a deal worth EUR 546 million or USD 730 million. The sellers included Columbia Capital, Innova Capital, HarbourVest Partners and M/C Partners. The acquisition of the Warsaw-based firm would enable Deutsche Telekom to add landline networks in countries like Poland, Hungary, Czech Republic and Romania. The Bonn-based phone company's services in these countries are largely wireless.
GTS was established in 1993. It is an Internet and phone service provider whose roster of customers included General Motors Co and Coca-Cola Co. In August, two people knowledgeable about the transaction said Level 3 Communications Inc, a telecommunications firm based in the US, also offered to buy GTS. Netia had also expressed interest in the Polish assets of GTS. Netia is the second biggest fixed line operator in Poland.
Deutsche Telekom Chief Financial Officer Timotheus Hoettges said in a statement, "We are investing against the trend. GTS is a further element for developing our integrated market position comprising mobile and fixed-line network services."
According to a Bloomberg report, new landline services could provide Deutsche Telekom the chance it needs to revitalize their business in Eastern Europe. In its third quarter earnings report last week, Deutsche Telekom said its earnings before interest, taxes, depreciation and amortization or EBITDA fell 27% in the Czech Republic. Its EBITDA in Croatia also decreased 21%. The report added the earnings plunged due to increased competition. Last year, the GTS posted revenues of EUR 347 million and EBITDA of EUR 87 million. The figures included its Slovak assets which GTS would continue to own in the latest transaction. The deal would still need to be approved by the regulatory authorities.
Bloomberg also reported that this month, the PPF Group of billionaire Petr Kellner said it would purchase a controlling stake in Telefonica Czech Republic in a deal valued at USD 3.4 billion.