Other Than DT, Who Might Bid For GTSCE?

June 5th, 2013 by · 12 Comments

GTS Central Europe Network MapAs 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?

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Categories: Fiber Networks · Mergers and Acquisitions · Metro fiber

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12 Comments So Far

  • schmuckinsurance says:

    I think you have to add Movil to that group Rob. It was reported earlier this week that Slim is trying to hive off the non-Austrian assets into a separate vehicle in order to inject liquidity there.

    Colt doesn’t fit b/c of the orders from Devonshire though those are always subject to change especially given that balance sheet and the footprint fit you point out.

    Speaking of bridges too far, if Naguib Sawiris was willing to go the Great White north, why wouldn’t he be willing to shoot across the Mediterranean?

    • Hmmm, Yes I suppose that America Movil is a viable possibility, although I haven’t seen them looking at this sort of asset too much yet.

      Good point on Sawiris, I’ll have to think about that one. For that matter, maybe I should also be thinking about something Turkish…

  • Anonymous says:

    France Telecom?

  • Christian says:

    Does anyone know more about the network of GTSCE? Is it based on fiber which they have digged themselves? Or is it based on dark-fiber-IRUs or anything like that?

    Deutsche Telekom already owns the former incumbent carriers Magyar Telekom (Hungary) and Slovak Telekom (Slovakia). Wouldn´t there be any problems with the antitrust agenies, if it also buys an alternative carrier in that countries? In Poland and the Czech Republic DTAG is present via T-Mobile so I suppose that they have some fiber infrastructure there?

  • David says:

    Versatel? To the extent that KKR is ready to look to add further int’l assets, but I suspect they are focused on completing German footprint first…?

  • Telecom Man says:

    DT buying GTS why??!! GTSCE has mainly a leased network. The only value they have is Poland with a regional dark fiber network and a good corporate customer base. Czech Republic and Romania is a money pit. DT already has a good hold in the CEE region. Let’s be honest the CEE region never had the returns in Telco everyone anticipated..

  • Telecom Man says:

    Netia makes more sense. GTS has significant local networks and SME customers to compliment Netia.

  • schmuckinsurance says:

    Looks like versatel looking for a bid of its own. KKR has it on the block after just 3 short years(original price tag, $330m), paper is speculating the large ILECs would be the interest list.

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