Looks like we may see another step forward in the consolidation of European fiber assets. According to a report out of the Wall Street Journal yesterday, Deutsche Telekom may be preparing to buy GTS Central Europe to boost its fiber depth to the east.
GTS Central Europe is perhaps the largest regional competitive fiber operator in Eastern Europe. With 26,000km of deep regional and metro fiber concentrated in the Czech Republic, Poland, Slovakia, Hungary, and Romania, the company hooks up some 15,000 buildings – 70% by fixed wireless with fiber for the rest.
Under the rumored deal, DT would pay some €600M ($775M) to acquire the assets, which were acquired by private equity some years back followed by an acquisition or two. GTSCE, which is led by imported American CEO Danny Bottoms, has 2012 revenues of €378M and EBITDA of €103M. For those counting, that suggests a valuation of a bit under 6xEBITDA, reflecting the more approachable valuations to be had across the Atlantic.
I find it interesting that the German incumbent is looking to buy fiber, as it has been a long time since any European incumbent has been a buyer of this sort of asset. With their US wireless arrangements now underway, they are apparently ready to focus some attention to the ground game in the east. But it could well be that others are bidding on this asset as well.
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