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Deutsche Telekom acquires landline based GTS Central Europe

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November 11
9:19 AM 2013

GTS Central Europe would be purchased by Deutsche Telekom AG for the price of EUR546 million or USD730 million. This purchase would add landline networks to areas where the German firm only provides wireless services, as a means to expand its scope of services.

The Warsaw, Poland based GTS is being acquired by the German telecommunications giant from its private equity owners, namely Columbia Capital, HarbourVest Partners, M/C Partners and Innova Capital. This was confirmed by the Bonn headquartered Deutsche Telekom and the said purchase would be subject to regulatory approvals. The purchase would provide landline services in grids in countries such as Poland, Hungary, Romania and the Czech Republic.

GTS was established in 1993 and it sells internet and phone services to clients such as Coca-Cola Co and General Motors Co. The price of the purchase valued the Polish company at 6.3 times its earnings before interest, taxes, depreciation and amortization or EBITDA. 

Deutshe Telekom shares fell 2% to EUR11.12 by late morning trading, setting the enterprise value of the firm to EUR49 billion. With the landline services available, it would help in reviving its busiinesses in eastern Europe. GTS for its part reported a revenue for 2012 at EUR347 million with an EBITDA of EUR87 million, excluding its Slovakian assets, that would be retained by the sellers of the firm.

In a statement, Deutsche Telekom Chief Financial Officer Timotheus Hoettges, "We are investing against the trend. GTS is a further element for developing our integrated market position comprising mobile and fixed-line network services."

In another part of the company, Deutsche Telekom's T-Mobile Netherlands Head Thomas Berlemann would be leaving the Dutch unit by 2013's end. The company had stated, through its website, that it had increased its investment spending in the country and reported a 19% drop in EBITDA for the third quarter. 

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