Euro M&A: GTS Central Europe Said to be in DT’s Sights

May 28th, 2013 by · 6 Comments

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.

TRImage_17 May. 28 06.36GTS 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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Categories: Fiber Networks · Mergers and Acquisitions · Metro fiber

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6 Comments So Far

  • schmuckinsurance says:

    As your last sentence implied, this isn’t over. It was reported this morning that Goldman will run the auction. Wonder if this week’s report of VOD gazing back at german cable was a smoke screen knowing this auction was coming.

  • schmuckinsurance says:

    TMT finance reporting that GTS Central Europe sale called off. To quote,

    The private equity owners of GTS Central Europe have apparently cancelled a sale process for the asset following a disappointing lack of interest from potential buyers. Goldman Sachs has been advising the sellers, while sources said Morgan Stanley had also been mandated.

    Bankers told TMT Finance that the owners, Columbia Capital, M/C Venture Partners, Innova Capital, HarbourVest Partners, Oak Investment Partners and Bessemer Venture Partners, were instead now speaking to banks about recapitalising debt.

    The asset was thought to have attracted interest from Deutsche Telekom, Level 3, PPF, Netia and several private equity firms. However, interest has waned in recent weeks, with Deutsche Telekom thought to have dropped its interest and Level 3 never really considered a serious buyer, said sources.

  • schmuckinsurance says:

    6.3x ebitda, not shabby.

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