As a helpful reader pointed out, the rumored move by DT on GTS Central Europe was just the initial bit of information and apparently there's actually an auction to be had. So let's engage in a bit of idle speculation. Who might fit the bill? Who would pay up for deep fiber in Eastern and Central Europe?
Deutsche Telekom - Yes, they're probably a real player here. With the T-MobileUSA situation now clarified, they've got to be looking at Europe and they've always been well placed to look east. They have the firepower and the local knowledge to win the auction out of hand if they want to. The question is, do they?
Level 3 - I know they've been doing some serious sniffing around assets in Europe for at least a year now, and GTSCE would be a great strategic fit for them. Level 3 is in Poland, the Czech Republic, Slovakia, and Hungary via a few dark fiber IRUs from several years back of course. But their real European depth has always been based on the main metro markets they started with way back in the bubble. These assets would give them a complementary footprint and the rumored price tag would make it a relative bargain. Frankly I think they're an aggressive bidder here, the timing seems right for a move like this.
Teliasonera - Other than DT, Teliasonera is probably the most interested of the continent's incumbents in buying actual assets in Eastern Europe. They've got a lot more going on in the region at other levels, from Turkey on up, and there aren't that many opportunities to add this type of asset. I like this one as much as Level 3.
Colt - I normally mention Colt in the context of being acquired, but this actually a pretty nice fit for them. The weakest part of their pan-European footprint is precisely where GTSCE has most of its depth, and the combination would boast some 30,000 on-net buildings across the continent. But Colt hasn't been looking at the fiber market in an M&A way for a long time, and most likely they'd be a cautious buyer if they show up at the table.
Vodafone - I have been speculating that they might look at buying if they sold their stake in Verizon Wireless, but they did just buy C&W Worldwide last year and could be in the market for more. But IMHO this is probably a bridge too far, if they buy fiber it will probably be in more conventional territory.
Interoute - They're smaller in revenue terms than these other bidders, but Interoute's backers could easily back a deal for GTSCE if they wanted to. It probably goes deeper at the metro level, however, than Interoute has been aiming for.
Other private equity - Valuations in Europe are low enough that it's not unthinkable for GTSCE to go from one private equity pocket to another. However I think the best bid here is more likely to come from a strategic buyer this time around. On the other hand, you could see someone like Zayo and their private equity backers come in on price alone. After all, Caruso has already been on the board at GTS and might make a move of his own if he feels the bidding is too low.
Any other thoughts?
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Fiber Networks · Mergers and Acquisitions · Metro fiber