Telecom Finance 227

Americas

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Q&A

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Middle East

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The definitive news source on raising finance

WESTERN EUROPE

Altice hires

advisers for PT bid

Q&A

Orange head of Europe

Gervais Pellissier

AMERICAS

Iliad drops T-Mobile

US ambitions

Issue 227 October 2014 www.telecomfinance.com

Telcos yet to unlock full potential of M2MTelcos yet to unlock full potential of M2M

MAKING THE CONNECTIONMAKING THE CONNECTION

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Now in its 10th year, theTelecomFinance Conference remains the

leading London-based industry event for decision-making executives,

advisers, investors and ocials in the global telecoms space.

Exploring ongoing key industry themes, includingM&A, regulation and

nance, the event also examines future revenue streams as telecoms

become evermore commoditised and challenged by advances in

other communications technology.

Key themes in our 2015 programme include:

The new European Commissions take on continental champions

The return to big convergence

Monetising infrastructure where does it end?

Fibre: the undercover, unregulated side of telecoms

Investorsnew darling: satellite

Book your delegate pass now to join the debates with our panels

of industry leaders, including:

HythemEl-Nazer, Principal,TAAssociates

Steve Collar, CEO,O3bNetworks

KarimMichel Nasr, CEO,DigitalWorld Capital

AndrewCole,Director, Liberty Global

The GuomanTower Hotel

London,UK

Thursday, 5th February 2015

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Operators across the globe are increasingly

foraging adjacent markets as they aim

to become all-round, diversied players.

Softbanks recent investments in Legendary

Entertainment and DramaFever, and Liberty

Globals purchase of All3Media are the most

recent examples of telcos strengthening their

content strategy.

Yet one sector remains relatively untapped

by operators: machine-to-machine (M2M)

and, more generally, the Internet of Things

(IoT). This industry, which encompasses

all sorts of services involving the wireless

connection of devices to the internet, is a

potential goldmine if Ciscos gures are to be

believed. According to the network systems

company, the sector is set to become a

US$19trn global opportunity by 2024.

Telecoms providers are in pole position

to make the most of IoT: comprehensive

wireless network coverage is key to

connecting cars, homes, utilities etc., to

mobile phones and other similar devices.

Yet, in the last couple of years, Verizon

Communications and Vodafonewere the

only notable operators to have been active

in M2MM&A deals.

In July 2012, US telcoVerizon bought

Hughes Telematics, a maker of wireless

systems for vehicles, in a US$612m deal. At

the time, John Stratton, president of Verizon

Enterprise Solutions, commented: Machine-

to-machine services are beginning to play a

vital role reshaping the business landscape

and setting new consumer expectations

about establishing valuable connections in

their vehicles, their homes and the world

around them.

It took a further two years to see another

telco conclude a similar deal. In August

2014, UK operator Vodafone acquired Italian

vehicle tracking and telematics group Cobra

Automotive Technologies for 193m. The

telco described the acquisition of Cobra as

being in line with its strategy to expand its

M2M offering, backing up the purchases of

Zelitron, Device Insight and X-Link.

But these companies are the exceptions to

the rule, as most other operators have so far

opted for M2M partnerships instead.

This approach provides a fast route to

market, but gives the operator limited control

over the service and only a small share of

revenue, explains Tom Rebbeck, research

director at AnalysysMason.

A few failures have so far deterred many

telcos from opting for the M&A route, but

acquisitions are the only way forward for

those looking to make the most of M2M,

Rebbeck asserts. Telecoms operators need

to decide how seriously they want to make

a play in M2M, he says. His special report

on telecoms operators and the IoT andM2M

market is on pages 48-49.While M2MM&A is

still relatively subdued, convergence deals are

on the up, as illustrated byOranges recent

3.4bn bid for Spanish xed-line operator

Jazztel.With this offer, the French incumbent

aspires to become Spains second-largest

xed-line broadband player. For this edition

of TelecomFinance, senior reporter Guy

Ferneyhough secured an exclusive interview

with Gervais Pellissier, Orange CEO delegate

and, since September, head of European

operations. Besides detailing the companys

rationale behind the Jazztel offer, the senior

executive also discussed Oranges strategy

in several of its European markets, stressing

the importance of convergence. The full

interview is on pages 16-17.

Elsewhere in Europe, Altice is also

positioning itself for a potential

consolidation deal. The telecoms holding

already owns xed-line assets in Portugal

and is now understood to be setting its sights

on the countrys incumbent, Portugal

Telecom (PT).

PTs parent company, Brazilian telcoOi,

has so far remained evasive about its plans

for the operator, only stating that it may sell

some assets. In Brazil, however, Oi seems

more determined. Its interim CEO Bayard

Gontijo was quoted as saying that a merger

with a Brazilian rival would speed up its

nancial recovery, with TIM in its line of

sight. CFO Gontijo replaced Zeinal Bava,

who resigned in early October, further

fuelling speculation that the Oi-PT merger

could unravel.

Also, in this issue, Guy Ferneyhough looks

at real estate investment trusts (REITs) and

how spinning off assets into such trusts could

help xed-line and cable operators unlock

signicant value. The feature is on page 47.

Finally here in London our events team

has been busy signing up speakers for

TelecomFinance 2015, our annual conference

which will take place for the 10th time on 5

February.We are delighted to conrm that

Steve Collar, CEO of O3b Networks, Andrew

Cole, a director at Liberty Global, Hythem El-

Nazer, principal at TA Associates, and Karim

Michel Nasr, CEO of DigitalWorld Capital,

will be among the telecoms deal makers,

executives and industry experts discussing

the sectors hot topics at the Guoman Tower

Hotel in London.

For a full list of speakers, programme and

latest updates, go to our events website

www.telecomnancelive.com. Please get

in touch for more information.

4 Western Europe

4 Orange moves for Jazztel

6 Tele Columbus IPO on ice

8 Altice pursues PT

16 Q&A: Orange head of Europe

Gervais Pellissier

18 Eastern Europe

18 Operators eye Tusmobil

20 PPF asks O2 CR for US$1.1bn loan

21 PM backs Telekom Slovenije sale

22 Middle East / Africa

22 Oi to sell Africatel

23 BTCL IPO in November

27 Viettel to enter Tanzania

28 Asia

28 STP buys XL Axiata towers

31 Softbanks Alibaba stake worth

US$75bn

36 Americas

37 Oi CEO steps down

39 Vimpelcom exitsWind Mobile

42 Iliad gives up on T-Mobile US

47 REIT opportunity

48 Special report

IoT and M2Mmarket

50 Mandate table

53 Networks

contents

telecomfinance

issue227October 2014

TelecomFinance

Editor: Pauline Renaud

[email protected]

Senior Asia correspondent: Jason Rainbow

[email protected]

Senior reporters Lorna Thornber

[email protected]

Guy Ferneyhough

[email protected]

Valeria Camerino

[email protected]

Sales manager: Jeff Jones

[email protected]

+44 207 963 7940

Subscriptions manager: Dave McCall

[email protected]

+44 207 963 7659

Design / production: Luke Thornhill,

Richard Preston

For information call +44 (0) 20 7963 7695

The Press Association Ltd

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No part of this publication may be copied, photocopied or

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ISSN: 1352-6456 VAT No 590 6285 16

2014 The Press Association Ltd

www.telecomfinance.com

viewpoint

Untapped M2M and

IoT opportunities

Pauline Renaud

Editor,

TelecomFinance

www.telecomfinance.com 3

4 www.telecomfinance.com

western europe

TDC snaps upNorwegian cableco Get for US$2.2bn,

Altice eyes Ois Portugal Telecom, and Tele Columbus has

second thoughts on IPO

French incumbentOrange has made a

3.4bn (US$4.4bn) bid for Spanish xed-

line operator Jazztel in an effort to bolster

its position in the highly-competitive

local market.

Orange is offering 13 per share in cash

for 100% of Jazztel shares, representing a

34% premium on the volume-weighted

average closing price over the 30 trading

days to 16 September.

The offer values Madrid-listed Jazztel at

8.6 times its projected 2015 EBITDA, taking

expected synergies into account, the Paris-

based company said.

Orange, which owns Spains second-largest

mobile operator by clients, estimates the

combined entity will generate up to 1.3bn

in global synergies, largely due to savings

in operational expenditure and network

investments.

The offer is conditional upon at least

50.01% of Jazztel shareholders tendering

their shares.

Jazztel chairman Leopoldo Fernandez

Pujals has agreed to sell his 14.48% stake and

other company directors, including CEO

Jose Miguel Garcia Fernandez and general

secretary Jose Ortiz Martinez, will also take

part in the tender.

Some of Jazztels shareholders rejected the

offer, saying it undervalued the company.

Orange CEO Stephane Richard

subsequently stressed that his company

would not raise its offer, which he says is very

attractive and represents a 67% premium on

Jazztels market cap at the end of 2013.

To nance the acquisition, Orange has

issued about 3bn (US$3.8bn) worth of

hybrid bonds, split into three tranches.

The operator has priced 1.25bn

(US$1.6bn) of 5% notes at 98.9 to yield

5.125%, equivalent to 412.8 bps over mid-

swaps. They have a seven-year rst call date.

It has also priced a 1bn (US$1.28bn) 4%

bond at 99.253 to yield 4.125%, equivalent to

365.7 bps over mid-swaps, with a 12-year rst

call date. Finally, Orange has priced 600m

(US$980m) worth of 5.75% notes at 99.222

to yield 5.875%, equivalent to 342.6 bps

over mid-swaps. They have an 8.5-year rst

call date.

All three bonds are perpetual. Orange said

investors have expressed a strong interest,

with total orders of over 11bn.

Lead managers on the offering, which was

rated Baa3 by Moodys, were BBVA, Citigroup,

Morgan Stanley andNatixis.

The bonds will be accounted as equity

under IFRS rules and will be granted a total

1.5bn equity credit by rating agencies.

The issue allows Orange to strengthen

its balance sheet at a cost of 4.5%, below

the average cost of its existing bonds, the

operator said.

The French telco noted that, given

the strength of its balance sheet, Jazztel

acquisition offer was not conditional upon

obtaining nancing.

However, it is subject to the approval of

relevant authorities, including the Spanish

Securities Commission (CNMV) and the UK

Takeover Panel. The latter will review the deal

as Jazztel has its registered ofce in the UK.

Richard was quoted on a conference call

with analysts as saying he expects the deal

to be subject to only a phase I competition

review.

The deal is scheduled to close in the rst

half of 2015. Bank of America Merrill Lynch

reportedly advised Orange on the transaction.

Number two player

Orange said the deal would create the

second-largest xed-line broadband operator

in Spain, as well as a dynamic mobile player,

pushing customers towards convergent offers.

In an economic context that has

continued to recover, this operation will

enable Orange to accelerate its growth in a

highly-competitive market.

Spains largest mobile operators are

Telefonicas Movistar andVodafone.

TeliaSonera-controlled Yoigo is the fourth

player behind Orange.

IHS Technology senior analyst James

Allison noted that an Orange Spain-Jazztel

merger would create an operator with a 25%

share of the Spanish broadbandmarket.

The acquisition of Jazztel would add 2.2

million homes passed with bre-to-the-home

technology, he said in a note to investors,

adding that it would also give Orange an extra

1.5 million MVNO customers.

In Allisons view, the offer is partly a

response toVodafones recent expansion in

Spain with its acquisition of cableco Ono

for 7.2bn.

As a result of the offer, Jazztel will pull out

of talks with TeliaSonera to buyYoigo. The

Spanish and Swedish telcos conrmed in

September that negotiations were underway.

However, during the call with analysts,

Richard was quoted saying that the company

does not need to acquire Yoigo and will focus

on combining its Spanish unit with Jazztel.

That said, Richard added that the company

supports consolidation in general and will

consider playing a role at a later stage if it is

able to.

For the past fewmonths, Orange has

repeatedly said it was interested in playing an

active role in Spain via acquisitions. Orange

CEO delegate Gervais Pellissier discloses

more details about the Jazztel deal in an

exclusive interview on page 16-17.

Orange offers 3.4bn for Jazztel

SPAIN

Telco says deal would create Spains second-largest broadband player

Orange CEO Stephane Richard

western europe


The Austrian arm of German food retail giant

Aldi Sud is in talks with T-MobileAustria

about launching anMVNO on its network, as

it looks to become a beneciary of Hutchison

Whampoas takeover of Orange Austria.

Supermarket chainHofer is aiming

to launch at the beginning of next year,

according to local media, and is reported to

be working with Ventocom, a prospective

virtual operator led by Orange Austrias

former CEOMichael Krammer.

T-Mobile Austria told TelecomFinance

that Krammer struck a deal for Ventocom to

operate anMVNO, but would not comment

on whether it would be serving Hofer

customers. Hofer did not reply to a request

for comment.

In mid-September, T-Mobiles CEO Andreas

Bierwirth said he expected a number of new

MVNOs to enter the market early next year.

Hutchisons 1.3bn acquisition of Orange

reshaped Austrias telecoms landscape,

reducing the number of operators in the

mobile market from four to three, and

was only allowed after substantial remedies

were agreed.

One of the commitments Hutchison

made was to offer up to 30% of its network

capacity to as many as 16 MVNOs over the

next 10 years.

In spite of the remedies, Austrian antitrust

regulator BWB said there has been signicant

price increases in the country following

the deal.

In late August, it launched an investigation

into the price rises and requested information

from operators.

Supermarket plans MVNO

AUSTRIA

In-depth review for

Telenet-De Vijver deal

The European Commission (EC) has

launched a Phase II investigation into

Belgian cableco Telenets proposed

acquisition of Flemish broadcasterDe

VijverMedia.

In June, the Liberty Global subsidiary

agreed to buy 50% of DeVijver by indirectly

acquiring Finnish group Sanomas 33.3%

stake in the TV network for 26m and

injecting 32m into the business in

exchange for stock.

The EC is concerned that as Telenet

is Flanders leading cableco and

DeVijver owns two of the regions most

popular Dutch-language free-to-air

TV channels, the transaction may lead

to competitors being cut out of the

Flemish market.

It is worried that the tie-up could

weaken Telenets competitors by either

making it more difcult for the buyers

rivals to get access to its cable platform,

and/or that access conditions for

DeVijvers two channels may worsen. Given

the importance of the Telenet platform

to reach end users in Flanders, such a

strategy of shutting out competitors may

negatively impact the ability of these

channels compete and to innovate, the

Commission said in a statement.

The EUs antitrust watchdog is worried

that if its fears are realised then consumers

could end up paying higher prices.

Liberty notied the Commission of the

transaction on 18 August and the regulator

said the deadline for its decision has been set

for 5 February 2015.

When the deal was announced in

June, Telenet said it would not be

consolidating DeVijver and that its

participation in the TV network would not

result in changes to the agreements it has

with other television providers.

The remaining 50% of DeVijver is

split between its CEOWouter

Vandenhaute and his business partner

ErikWatte, who together own 25% through

their companyW&W, and local media

group Corelio, which holds the nal 25% of

the company.

BELGIUM

Vendor Alcatel-Lucent has completed the

sale of a majority stake in its Alcatel-Lucent

Enterprise subsidiary to ChinaHuaxin.

Alcatel, which will retain a 15% interest in the

unit, expects to receive cash proceeds of 202m

(US$255m) from the transaction.

The equipment company entered exclusive

talks with China Huaxin in early February, after

receiving a binding offer from the technology

investment company for the unit.

At the time, it was reported that Lazardwas

advising Alcatel on the sale. The subsidiary,

which claims to have over 2,700 employees

worldwide and operations in more than 80

countries, will be headquartered in Colombes,

near Paris.

Alcatel said in a statement that the

divestment forms part of a strategic plan

launched in June 2013 to refocus itself as a

specialist in IP, cloud and ultra-broadband

access, while realigning its balance sheet,

implementing cost savings of 1bn and

generating at least 1bn through selective asset

sales by the end of 2015.

In August, the vendor revealed that it was

considering launching an IPO for part of its

submarine cables unit in the rst half of 2015.

Alcatel closes

enterprise unit

sale

FRANCE

Fresh from its acquisition of German bre operator Versatel in

September, ISPUnited Internet is eyeingmore purchases as it

continues its efforts to consolidate Germanys broadbandmarket.

United Internet plans to expand its network and sees

further opportunities to buy smaller operators, its CEO

Ralph Dommermuth told a local publication without naming

specic telcos. At the start of September,United Internet

agreed to pay 586m (US$770.3m) for private equity rm

KKRs 74.9% stake inVersatel and assume the telcos 361m

(US$474.5m) debt.

TheVersatel acquisition strengthened United Internets

position as Germanys number two DSL provider, behind

DeutscheTelekom.

The ISP will be able to boast 4.12million subscribers when the

deal closes,which is expected to happen during October subject

to antitrust approval.

United Internet targets more buys

GERMANY


western europe

German cableco Tele Columbusplans to

raise at least 300m (US$378m) through an

IPOmay be put on hold, following a slump in

European equity markets.

On 30 September, Tele Columbus

announced its intention to list before the end

of the year but, two weeks later, it released

another statement noting market uncertainty

and said it would continue to monitor the

exchanges.

Since the cable operator revealed its

plan to oat, two German tech companies

e-commerce group Rocket Internet and

online retailer Zalando have experienced

disappointing IPOs.

German classieds group Scout24, sold by

Deutsche Telekom to private equity last year,

was also planning to list on the Frankfurt

bourse before the end of the year. However,

reports suggest it has postponed that move

until 2015.

In contrast, local property company TLG

Immobilien is still set to push ahead with

its listing. In mid-October, the German

government slashed its economic growth

forecast for this year and next. It now projects

1.2% growth in 2014, down from its previous

estimate of 1.8%, and expects only 1.3%

growth rather than 2% for 2015.

The German economy, which could be

heading for a technical recession, has been

hit by the poor performance of its Eurozone

trading partners and the geopolitical crises

on the eastern border of Ukraine. Tele

Columbus possible IPO entails selling

existing equity and issuing new shares. The

company has not indicated howmuch of its

stock will be listed on the Frankfurt bourse or

whether some of its current investors will take

the opportunity to exit.

Germanys third-largest cableco will use

the proceeds to cut its debt and is planning a

renancing, which will reduce its leverage to

around 3.5x normalised LTM EBITDA.

Tele Columbus, owned by several hedge

and credit funds via a Luxembourg-based

holdco, mandated Goldman Sachs and JP

Morgan at the start of the summer to work on

a listing. BofA Merrill Lynch and Berenberg are

listed as joint bookrunners and Rothschild is

Tele Columbus nancial adviser.

Tele Columbus management is bullish

about the companys prospects. CEO Ronny

Verhelst said: The signicant growth

potential of Tele Columbus is based on one

of the best performing cable networks in

the Germanmarket and a very attractive

customer base with signicant potential

for selling additional products and services

beyond cable TV services.

British telcoVodafone acquired Tele

Columbus larger rival Kabel Deutschland

(KDG) for an enterprise value equivalent to

11.9x its EBITDA in 2013. Meanwhile, Liberty

Globals recent acquisition of Ziggo valued it

at 11.3x EV/EBITDA, andVodafones purchase

of Spanish cableco Ono equated to around

10.5x EV/EBITDA.

Tele Columbus is an integrated level 3/

level 4 operator and claims to have 1.7 million

connected households as of the end of June.

It offers cable television, broadband and

telephony, and recorded 207.7m in revenue

for 2013 and 89.6m EBITDA.

In 2013, KDGmade an unsuccessful

attempt to acquire Tele Columbus,

meeting resistance from the German

antitrust regulator.

Chairman appointed

Meanwhile, the cableco has appointed a

chairman to its new supervisory board, ahead

of the IPO announcement and converted into

a stock corporation to facilitate the expansion

plan. Frank Donck, a former supervisory

board chairman of Belgian cableco Telenet,

leads the three-member supervisory board.

The other members are Carsten Boekhorst,

a partner with the UKs Pamplona Capital

Management, and former Belgian prime

minister and OECD vice president Yves

Leterme.

Tele Columbus Holding, the operating

arm, is now known as Tele Columbus AG. In a

statement, the group stressed that the change

in legal form and name has no impact on its

operating business or registered ofce, which

will remain in Berlin.

Verhelst said the conversion into a stock

corporation completes the structural and

organisational realignment we have been

implementing over the past years.

The new legal form also gives us more

exibility for additional growth and the future

development of Tele Columbus.

Tele Columbus 300m

IPO in doubt

GERMANY

Frances competition authority has rejected

incumbentOranges request to immediately

suspend a plannedmobile network sharing deal

between two of its rivals,BouyguesTelecom

and SFR.

The regulator justied its decision by saying

the agreement did not pose a serious or

immediate threat to either Orange, consumers

or the sector.

Early this year, SFR andBouygues agreed to

jointly operate 11,500 towers that would enable

them to cover 57%of Frances population.They

also have a temporary 4G roaming agreement

in place that runs until the end of 2016. In

May, the incumbent led a complaint with the

authority, arguing that the agreement

was anticompetitive because it covers a large

area of the country. Orange alsowanted the

deal to be suspended until SFRwas actually

sold to local cablecoNumericable, so the

impact on the French telecoms landscape

could be better assessed.

ConglomerateVivendi agreed to sell SFR

to Altice and its Numericable unit earlier this

year. However, Orange is concerned that the

converged entity will compete directly with its

operations. Its CEO Stephane Richard said a few

months back that his companywas planning

to also complain to the regulator about certain

aspects of the proposedmerger.

Orange has said it will appeal the authoritys

decision on the Bouygues-SFR network

deal and stressed that only its request for an

immediate suspension has been rejectedwhile

a decision regarding its complaint has not yet

been taken.

A spokesperson for the company added:

Wewill be extremely vigilant as to the effects

on competition once SFR actually start using

Bouygues 4G network, andwe reserve the

possibility of ling an additional request for the

immediate suspension of the contract based on

factual elements.

Bouygues-SFR network deal to go ahead

FRANCE

Cableco pauses for thought as German economy sags


western europe

Spanish incumbent Telefonica has nalised its 8.6bn

(US$11.34bn) acquisition of Germanmobile operator E-Plus from

Dutch telcoKPN.

As previously agreed, the Spanish group will retain a 62.1% stake

in its local unit Telefonica Deutschland, which now includes

100% of E-Plus,while KPNwill hold a 20.5% interest in the

combined entity which is subject to a lock-up period of 180 days.

The remaining shares are publicly traded.

Telefonica said the deal enables it to become the largest mobile

player in Germany with around 41millionmobile accesses,

combined revenues of approximately 8bn and expected synergies

of 5bn.

The Spanish group also said it is now the second-largest

operator in Europe in terms of subscribers and revenues.

Thanks to the conclusion of the acquisition of E-Plus, the

recent acquisition of GVT and the commercial revolution which

has transformed the Spanishmarket,Telefonica has gained a

leading position in three of its most importantmarkets: Germany,

Brazil and Spain, commentedTelefonica.

Rights issue

At the end of August, the European Commission rubber-stamped

the deal after a lengthy regulatory review.To secure approval,

the companies agreed to guarantee local MVNOs access to their

networks in order to preserve competition.

To nance the 5bn cash consideration of the deal,Telefonica

Deutschland raised 3.6bn through a rights issue, selling over

1.11 billion shares at 3.24 each.Telefonica Deutschland gave

shareholders the right to buy one new share for each existing share

they already owned.

Citigroup,HSBC,Morgan Stanley andUBSwere joint global

coordinators.BofAMerrill Lynch and JPMorgan acted as joint

bookrunners,while Santander,Bayerische Landesbank,BBVA,

BNP Paribas,Commerzbank,Mediobanca andUnicreditwere

joint co-leads.

Meanwhile, its parent issued 1.5bn worth of convertible notes.

E-Plus CEO Thorsten Dirkswill head the combined company.

Telefonica Deutschland CFO Rachel Empey and COOMarkus Haas

will continue in their respective role on themanagement board of

the new entity.

GERMANY

Incumbent Eircom has shelved plans for an

initial public offering that could have raised

as much as 1bn (US$1.3bn) after concluding

the strategic review it began in April.

In a statement, Eircom said there were

encouraging signs of positive momentum in

its business and its decision had the backing

of its key shareholders.

Eircom investors would prefer to

continue participating in the upside from

the signicant network investment made in

recent years, which has only recently begun

to manifest itself in the companys operating

and nancial results, the operator said.

Reports have suggested Eircoms

shareholders valued the business at 3bn

(US$3.9bn) and had hoped to raise 1bn, but

they could not convince potential investors

that their valuation was justied.

Alongside an IPO, Eircoms advisers

Goldman Sachs,Morgan Stanley and

Rothschild were also sounding out potential

buyers. Operators Vodafone and Deutsche

Telekom, as well as private equity rms KKR,

Apax Partners and CVC were all reported to

have discussed potential deals, but none of

these talks resulted in an offer.

In late August, Eircom won the consent of

its shareholders, bondholders and lenders

for a corporate reorganisation, which would

have seen it incorporate in Jersey and be a tax

resident in Ireland. This would have

given Eircom greater exibility to pay

dividends to shareholders in the future

if it chose to list. It is yet to take up the

reorganisation option but could choose to if it

revisits an IPO further down the line.

A banker not involved in the talks told

TelecomFinance that Eircoms investors may

look at an IPO again in a year or so, once the

company sees its results increase.

CEO leaves

Ten days after the strategic review ended,

the incumbent announced the departure

of its CEO.

Herb Hribar returned to the US after two

years with Eircom. The board appointed

CFO Richard Moat as acting CEO with

immediate effect.

Commenting on the CEOs exit, Eircoms

chairman, Padraig McManus, said: He has

tirelessly dedicated himself to reshape the

company ...We now operate Irelands largest

bre network and Eircom was the rst to offer

4Gmobile services in Ireland. All of this was

achieved while reducing our cost base and

improving our competitiveness.

McManus continued by saying that the

experience, knowledge and enthusiasm

of Moat would keep the business on an

even keel.

An IPO this year would have come just

two years after the group was taken over by

its bondholders, which snapped it up from

an administration process. That takeover

saw US-based private equity rm Blackstone

become Eircoms largest shareholder.

Eircom rules out IPO

IRELAND

Telefonica closes E-Plus deal

Herb Hribar has

left Eircom

Luxembourg-based telecoms holding

Altice is negotiating the acquisition ofOis

PortugalTelecom (PT) and has hired

Goldman Sachs andMorgan Stanley to advise

it on a bid, TelecomFinance has learnt.

Owned by billionaire Patrick Drahi, Altice

already has a presence in the Portuguese

market through telecoms operator Oni,

which it acquired in June 2013, and cableco

Cabovisao, which it bought in February 2012.

Local media reports have also named

UK-basedVodafone Group and Spanish

Telefonica among the potential bidders.

But Altice is reportedly looking to enter

into exclusive talks with Oi over PT and

the holding is rumoured to have contacted

the groups Brazilian and Portuguese

shareholders to discuss issues including price

and proposed deal structures.

In a statement on 13 October, the

Brazilian telco Oi said that there were

various parties, including Altice, that

have expressed an interest in the companys

Portuguese operations.

The telco noted the potential bidders have

contacted its adviser, BTG Banco Pactual, to

request information about PT to potentially

acquire the target or part of its non-strategic

assets. In an earlier securities ling, Oi had

responded to market speculation saying

that it had not taken any decision regarding

the sale of PT, which it agreed to acquire in

October 2013, and had not received an offer

for the asset.

It, however, added it was still continuing

with its strategy to dispose of non-core assets

including Africatel, for which it had not

received a bid either.

Ois interim CEO Bayard Gontijo later

added that Oi was not looking to unravel its

merger with PT, although it could sell some

Portuguese assets.

Deal talks between Altice and PT would

need to establish howmuch debt the

Portuguese company would retain. In early

September, Oi and PT revised the terms of

their merger, following Riofortes default on

a 847m (US$1.1bn) debt payment to the

Portuguese operator which forced it to reduce

its stake in the combined entity from 37.4%

to 25.6%.

Ois CFO Gontijo was named interim CEO

in early October, following the resignation

of Zeinal Bava.

Bava, who was appointed as head of the

Brazil-based combined Oi-PT business

in June 2013, has been instrumental in

facilitating the merger, further fuelling

speculation that the combination could be

undone in the wake of his departure.

Rumours of Altices interest in PT rst

emerged in early August when CEO Dexter

Goei said the company would continue to

monitor the situation in Portugal.

There continues to be several steps that

this can play out, particularly as the Brazilian

consolidation play is just starting to get

rolling, he noted.

Altice is currently seeking regulatory

approval for the merger between its French

cableco Numericable and local mobile

operator SFR, which it agreed to acquire from

Vivendi in April.

Besides Portugal and France, Altice

owns a portfolio of telecoms assets in

Belgium, French overseas territories, Israel,

Luxembourg and Switzerland.


western europe

Altices owner Patrick Drahi

Altice targets

Portugal Telecom

PORTUGAL

Telco reportedly seeks to enter exclusive talks with Oi

Altice already has

a presence in the

Portuguese market

through telecoms

operator Oni and

cableco Cabovisao


western europe

The CEO of Telecom Italia (TI), Marco Patuano,

has reportedly received a mandate from the

management board to negotiate the acquisition of

infrastructure fund F2is stake in local dark bre

operatorMetroweb.

Patuano was given the mandate at the last board

meeting on 26 September, according to a newswire

report citing a source close to the matter.

However, two of Metrowebs shareholders

Fastweb and government-owned lender Cassa

Depositi e Prestiti (CDP) were reported as saying

they were not aware of any plans to sell F2is stake

to TI.

In March, media reports had already suggested

that the Italian incumbent was planning to invest

300m for a less than 50% stake in Metroweb to

avoid antitrust scrutiny. TI was reportedly looking

to buy the stake from F2i, which holds an indirect

46.8% interest in the bre optic provider.

Most of the remaining shares are split between

CDP, with an indirect 32.2% stake through Fondo

Strategico Italiano (FSI), and Fastweb which

holds 10.6%.

In September, CDP CEO Giovanni Gorno

Tempini reportedly said Metroweb had the nancial

resources to invest in bre projects and was

welcoming approaches from potential partners.

A deal with Metroweb would make strategic

sense for TI, as the company is striving to reduce

its more than 28bn net debt to upgrade its

broadband network.

In 2011, F2i and Intesa San Paolo bank fully

acquired Metroweb fromUK investment fund

Stirling Square Capital Partners and multi-utility

company A2A for 436m.

TI CEOmandated

for Metroweb deal

ITALY

Speculation over the future of Italian triple-play operator Fastweb

has reignited following a report which suggests that its parent,

Swisscom, has hired a bank to explore a sale of the unit.

The Swiss incumbent is working withUBS, previously an adviser

to long-term Fastweb suitor Vodafone, to see if a deal can be done

with the British telco, sources familiar with the situation told a

newswire in early October.

Vodafone is reportedly not currently in talks with Swisscom but

retains an interest in acquiring the Italian telco.

Fastweb CEO Alberto Calcagno was later quoted as saying that

the sale rumours were mere gossip,while Aldo Bisio, the head

ofVodafone Italy reportedly said that present conditions were

not favourable for a deal to buy the Italian broadband company.

Italy isVodafones largest Europeanmarket where it is yet to offer

xed-line services and has therefore been linked to a Fastweb

acquisition since it decided to focus on adding xed-line assets to

its mobile operations.

Swisscom,which is majority-owned by the Swiss Confederation,

acquired Fastweb in 2007 for an enterprise value in the region

of 4.2bn.The business could now be worth asmuch as 5bn,

according to the report.Fastweb has the second-largest network

in Italy after Telecom Italia.The Italian incumbent has itself

been linked to an acquisition of smaller local B2B bre operator

Metroweb, in which Fastweb has a 10% stake (see story above).

However, the asset is not of interest toVodafone as it would not

amount to a game-changing acquisition, the report said citing

one of the people.Vodafone has acquired a number of xed-line

operators over recent years in the larger Europeanmarkets it

operates in: in 2012, it bought British enterprise player Cable &

WirelessWorldwide for US$1.67bn; in 2013 it sealed its US$10.5bn

takeover of Kabel Deutschland; and this year it bought Spanish

cableco Ono for US$10bn.

Vodafone has also hinted at a transformationalM&A deal in

the longer term. In September, its CEOVittorio Colao was cited as

saying his company could explore a purchase of pan-European

cable giant Liberty Global for the right price (see story on page 15).

ITALY

Fastweb sale rumours return

Telecom Italia CEO Marco Patuano

western europe


EC green-lights

Liberty-Ziggo deal

Liberty Globals takeover of Dutch

cableco Ziggo has been cleared by the

European Commission following a Phase II

investigation.

To obtain approval for the acquisition, the

pan-European cable giant offered remedies

to address certain competition concerns,

including the divestment of its Film1

business in the Netherlands.

Liberty Global also pledged to terminate

clauses currently in carriage agreements

with TV broadcasters that restrict the ability

of broadcasters to offer their channels and

their content through OTT services, and

committed not to end those agreements

for eight years.

Furthermore, in order to ensure that

commitment cannot be undermined, Liberty

Global has committed to maintain adequate

interconnection capacity through at least

three un-congested routes into its internet

network in the country, at least one of which

with a large transit provider.

Joaquin Almunia, the Commissions vice

president in charge of competition policy,

commented: The commitments offered by

Liberty Global ensure that the acquisition

of Ziggo will not be detrimental to Dutch

consumers, who will continue to enjoy the

benets of innovative services and choice for

watching audio visual content.

Mike Fries, CEO of Liberty Global, said:

We are excited to create a national cable

champion, and look forward to restarting our

share buyback programme very soon.

Liberty Global was forced to prolong its

public offer for Ziggo shares to 4 November

when the European Commission extended

its review of the purchase.

Liberty struck a deal to buy the Dutch

cableco for 4.9bn (US$6.6bn) earlier this

year and merge it with its own local cable

assets,UPCNetherlands.

In June Liberty launched its 35.74 per

share offer, a 47% premium over Ziggos

closing share price on 27 March. The

antitrust authority had set a provisional

deadline of 3 November to nish its review of

the transaction.

The tie-up brings together the

Netherlands two largest cable operators,

although the companys footprints do not

overlap.

Frenchmedia group Vivendi is reportedly looking to acquire

a stake in Italy-basedMediasets pay-TV unit from Spains

Telefonica to expand its footprint in the country.

The company is interested in buying 11% ofMediaset

Premium, according to a newswire report.

As part of a deal agreed in September to sell its Brazilian

broadband business GVT toTelefonica,Vivendi will receive

a 5.7% stake in Telecom Italia (TI) which represents 8.3%

of the Italian incumbents voting capital.

Such a stake could reportedly help it forge alliances

to distribute its contentmore widely in Italy.

Telefonicamight be keen to sell its Mediaset Premium

stake,which it acquired in July for approximately 100m,

as it is looking to fully exit Italy, an analyst was quoted

as saying.

Telefonica reportedly has the right to sell back the interest

within sixmonths from acquiring it, if the Italianmedia group

nds another partner for the business.

Should a deal withMediaset go through,Vivendi would be

going back to a familiar market.

In 1997,Vivendi-owned Canal+ bought Italian pay-TV provider

Telepiu. It was thenmerged with News Corps pay-TV division

Stream in 2001 and sold to News Corp a year later, in a bid to

reduce the parents debt.

Vivendi eyes Mediaset Premium stake

ITALY

Quad-play operatorNos, which was

created from the merger of Zon and

Optimus, has sealed a 175m (US$225m)

bond issued to renance existing debt.

BNP Paribas, ING and Societe Generale

acted as mandated lead arrangers and

bookrunners for the six-year private

offering. Caixabankwas lead arranger.

The notes mature in September 2020.

They carry a oating interest rate with a

spread of 215 bps, and the rst coupon

will be due in March 2015.

The new facility will replace an existing

100m bond originally placed by Zon and

Optimus parent Sonaecom in September

2011. It was arranged at the time by BNP

Paribas,WestLB and ING and was due to

mature in March 2015.

The 2020 notes will also renance a

25m bond issued in November 2010 in

a private placement led by Banco BPI,

Banco Santander Totta and BNP Paribas.

Nos said the renancing enables it to

further diversify sources of debt, while

increasing the average maturity of its net

nancial debt to 2.5 years and further

reducing the all-in average cost of debt.

Cableco Zon and wireless operator

Optimus agreed to merge in January

last year to create Portugals second-

biggest telco behind incumbent

Portugal Telecom.

After a lengthy antitrust review,

the combination received regulatory

approval and the deal completed in

late August 2013.

Nos issues

175m

bond

PORTUGAL

The commitments

offered by Liberty

Global ensure

the acquisition of

Ziggo will not be

detrimental to Dutch

consumers, who will

continue to enjoy the

benets of innovative

services and choice

for watching audio

visual content

NETHERLANDS

western europe


Denmarks telco TDC has agreed to acquire

Norways second-largest cableco Get from

its private equity owners for NKr13.8bn

(US$2.16bn), in a deal it says will create

Scandinavias largest cable TV company

in terms of revenue.

TDC will nance the purchase from

Goldman Sachs GS Capital Partners

andQuadrangle Capital Partners by

issuing debt.

The Copenhagen-based operator will

simultaneously adjust its dividend payout

ratio to about 60% of its equity free cash

ow. This reduces the dividend payout for

2014 to DKr2.50 per share from a previously-

anticipated DKr3.70 per share.

In early September, it was reported that

bankers were working on debt nancing

packages for potential buyers of around 1bn

(US$1.3bn), with senior leveraged loans,

second lien loans and high-yield bonds all

considered as options.

JP Morgan acted as TDCs nancial adviser

on the transaction, while Kromann Reumert

was its legal adviser. The Danish telco expects

the deal, which is subject to the approval of

Norwegian competition authorities, to close

in Q4 this year.

Gets owners hired Goldman Sachs and

Deutsche Bank in May to examine an IPO,

but later opted for a sale process. The

acquisition will see TDCs cable business

increase from 1.2 million to 1.7 million

connected households and produce revenues

of DKr7bn (US$1.2bn).

TDC CEO Carsten Dilling described the

deal as the companys most signicant

investment in many years, saying it

marks its transformation into a leading

Scandinavian provider of TV, home

entertainment and high-speed broadband

services using the cable platform.

It is also a strategic move into the

consumer market in Norway within an

industry we know very well from having

run our YouSee cable business in Denmark

successfully for years.

Dilling added that TDC Norway, which

owns a bre-based transmission network

and focuses on large business customers,

and Get, which targets individuals and

small and medium-sized businesses, are

a good match from both a commercial

and a technical perspective.

Gets current CEO Gunnar Evensen, who

has held the post since 2000, will lead the

combined organisation in Norway.

Get had a turnover of NKr2.4bn

(US$374.8m) in 2013 and EBITDA of

NKr1.1bn (US$171.79m), TDC said. It owns

and operates a hybrid bre and coax network

in urban areas, passing about 700,000

households and businesses, 500,000 of which

are connected customers.

GS Capital Partners and Quadrangle

bought Get for 725m in 2007. In 2012, they

considered putting the business up for sale

and a 1bn-plus price tag was mooted.

They later decided to reorganise Gets

debt and hold on to the cableco.

Telenor is the largest supplier of mobile

services, pay-TV and xed broadband

in Norway.

TDC buys Get for US$2.2bn

NORWAY

Danish telco snaps up cableco from private investors

TDC CEO Carsten Dilling

Norways third largest carrierTele2 has inked

an agreementwith IceCommunication,

owned by new entrant Access Industries, to

gain access to part of its 900MHz spectrum

until April 2015.

Under the deal, Icewill be able to buy parts

ofTele2smobile network infrastructure if the

countrys competition authority approves the

sale ofTele2 to larger rivalTeliaSonera.

The companies did not disclose the nancial

terms of the agreement.

TeliaSonera, which is Norways second largest

player, agreed to buyTele2 in July for SKr5.1bn

(US$744m) after the target lost out in last

Decembers 4G auction.

In early September, the competition

authority set an 11November deadline to

assess whether themerger would result in

reduced competition and harm consumers.

Regulatory concerns over the deal, which

would combine two of the countrys three

establishedmobile operators, prompted the

Norwegian Post andTelecoms Authority (NPT)

to scrap the January 2015 date it had set to

auction 1,800MHz spectrum.

The infrastructure deal will enable Ice,

a subsidiary of American billionaire Len

Blavatniks Access Industries, to expand its

network coverage, thus potentially becoming a

viable third player.

This [agreement] has a very positive impact

on competition in theNorwegianmarket, said

TeliaSoneraNorway CEOAugust Baumann in

a statement.

It helps tomeet the political target

according towhich there should be three

mobile networks in the country, while it

also guarantees network access toTele2s

customers until spring 2015, when the

trafcwill be switched over to our network,

he added.

TeliaSonera, which committed itself to 98%

population coverage for 4G by the end of 2016

if themerger withTele2 goes ahead, said it has

not taken part in the negotiations between Ice

andTele2.

BuyingTele2Norwaywould boost the

companysmarket share from23% to around

40%with 2.7million subscribers, although it

would still lag behind the countrys incumbent,

Telenor, which has 3.2million customers.

InDecember 2013, Norway secured

NKr1.79bn (US$291m) by selling frequencies to

TeliaSonera,Telenor and Ice.

After failing to secure spectrum,Tele2

hired ABG Sundal Collier inMarch to identify

strategic options to stay competitive in the

Norwegianmarket.

Tele2 strikes sharing deal with Ice

NORWAY

western europe


Telefonica prices 800m

eurobond

Incumbent Telefonica has priced a 800m

(US$1.01bn) bond at par.

Launched under theMadrid-based

companys EMTN programme, the notes

carry a coupon of 2.932%, have a reoffer

price of 100% andmature in October 2029.

Leadmanagers for the issue were BBVA,

Credit Agricole,Caixabank,Mitsubishi UFJ,

RBS and Santander.

Moodys rated the bond Baaa2,while

Standard & Poors and Fitch gave a BBB. In

mid-September,Telefonica issued 1.5bn

worth of convertible notes to help nance

its 8.6bn takeover of Germanmobile

operator E-Plus.

Also in September,Telefonica agreed a

7.24bn cash-and-stock deal to purchase

Vivendis Brazilian broadband unit GVT.

The telco will fund the cash component

of the deal with a capital increase at its

Brazilianmobile unitVivo.

It will subscribe to this to keep its current

74% stake, funding this, in turn,with a

capital increase at group level.

SPAIN

Greeces telecoms regulator EETT has

said local operators paid a total of 381m

(US$482m) for spectrum licences in the

auction of 800 MHz and 2.6 GHz frequencies.

Incumbent Cosmote, British-backed

Vodafone Greece andWindHellas

acquired all the available 15-year licences.

Cosmote spent 135m on two paired blocks

in the 800 MHz band, six paired blocks in the

2.6 GHz band, and a further two single blocks

in the 2.6 GHz. Vodafone bought the same

spread of licences for 124.5m. Meanwhile,

Wind purchased two paired blocks of 800

MHz spectrum and four paired blocks in the

2.6 GHz band for 122m. EETT started on

working on the digital dividend auction back

in May 2013 following a renewed bailout plan

with the European Union and International

Monetary Fund, which prescribed a

switchover from analogue to digital TV to

free up airwaves.

The recession-hit countrys telecoms

market is moving closer toward consolidation,

which local analysts say the sector dearly

needs. Vodafone andWind held talks about a

merger in 2012, but Vodafone pulled out of the

process. However, analysts believe a deal may

still happen in the future as the companies

have become closer since 2012.

4G auction

raises 381m

GREECE

UK

EuNetworks inks

70m funding

Pan-European bre operator EuNetworks

has secured new debt to develop its network

and repay existing debt.

The bandwidth infrastructure provider has

entered into a 70m (US$88m) multi-currency

credit facility with Barclays and RBC Capital

Markets, and the loan can be expanded to

100m (US$126m) if growth opportunities

present themselves.

EuNetworks did not disclose the terms of

the loan beyond saying it was happy with the

interest rate, total leverage incurrence test,

and the delayed draw feature.

Brady Rafuse, CEO of EuNetworks, said:

This funding enables us to further meet the

growing bandwidth needs of existing and

new customers across Europe.

Some of proceeds of the new loan will

be used to completely repay existing debt

facilities that were entered into in May 2013.

EuNetworks operates bre and data centres

across Europe and is headquartered in

London, although the business has been listed

on the Singapore Stock Exchange since 2004

and is registered on the island.

Sol Trujillo, the former CEO of Australian

telco Telstra, is reportedly looking to raise

7.5bn (US$9.6bn) to acquire a stake in Italian

incumbentTelecom Italia(TI).

Trujillo, who has not yet approached TI,

has discussed the potential bid with nancial

advisers, according to a Bloomberg report,

which cites people familiar with the matter.

A number of Qatar and Abu Dhabi-based

sovereign wealth funds have reportedly shown

interest in the project.

A 7.5bn offer would represent just under

half of the incumbents market capitalisation,

which currently stands at 17.55bn.

Senior Italian ofcials, including junior

minister for economic development Antonello

Giacomelli, reportedly held condential

meetings over the project.

A later, separate, report quoted Giacomelli

as saying he was not aware of Trujillos plans,

adding that the Italian government would

use its special powers to defend the company

if required.

Trujillo started his career at AT&T in 1984.

He was later appointed CEO of USWest and

also headed French incumbent Orange for

a year. In 2005, he became CEO of Melbourne-

based Telstra.

TI is trying to ofoad some of its assets to

reduce its net debt, which stood at 28.8bn, as

of 30 June 2014.

In recent years, TI has attracted interest

from a number of overseas investors,

including Hong Kong billionaire Li Ka-shing,

AT&T, Carlos Slims America Movil and

Egyptian tycoon Naguib Sawiris, who saw its

US$3.8bn offer to buy a stake in TI rejected

in 2012.

Sawiris was recently quoted as saying that

he would invest in TI as long as the company

kept its stake in Brazilian mobile operator TIM

Brasil. He reportedly added that he would be

willing to take part in a capital increase but

would not buy shares on the market.

However, during an event in Capri in early

October, TI CEOMarco Patuano reportedly

said the company was not studying any

capital increase, including issues dedicated to

new investors.

No tower sale in 2014

Patuano also pointed out that the company

will not close the sale of its tower portfolio

by the end of this year, as initially expected,

adding that it was currently evaluating

two options.

At the end of July, local media reports

suggested that TI was looking to launch the

sale process for its 8,000 mobile telecoms

towers in September.

Earlier reports had said that instead of

selling the towers outright, TI management

was looking to spin off the tower assets, worth

an estimated 1bn (US$1.34bn), before listing

them on the stock exchange.

Italian towerco EI Towers and infrastructure

fund F2i as well as Spains Abertis and

American Tower have been reported as

potential bidders.

Proceeds from the tower sale are expected

to be used to upgrade its domestic networks.

Former Telstra

CEOmulls TI offer

ITALY

A Phones 4u store in the UK remained closed after the company went into administration

western europe


Phones 4u goes bust

Phones 4us administrator PwC has

agreed to sell almost 200 of the stricken

resellers shops to network operators EE and

Vodafone for about 15m (US$25m).

Phones 4u went into administration on 15

September after EE andVodafone decided not

to renew their contracts with the company.

EE will buy 58 stores for approximately

2.5m while Vodafone will acquire 140 Phones

4u outlets for 12.4m.

Both deals are subject to the approval

of the UK courts, and the administrator

said it hopes both disposals can be ratied

in one hearing. The remaining 350

standalone stores will be closed. A group

of investors, which hold some of

Phones 4us 430m (US$702m) senior secured

notes, had proposed to take a substantial

write-down on their debt to reorganise

Phones 4u so that it can meet the lower

commercial terms EE andVodafone

had proposed.

PwC subsequently dashed bondholders

hopes for a debt-for-equity swap, saying it

was not viable.

Phones 4us private equity-owner

BC Partners has already recouped its

investment in the retailer. In September

2013, Phones 4u issued 200m (US$327m)

PIK toggle notes to pay BC Partners a one-off

dividend, which was topped up with a further

25m in cash. This paid off all of BC Partners

initial equity used to buy Phones 4u and the

rm has made a 30% prot on its investment.

UK

Rumours of a sale of Sunrise have resurfaced after a report

suggested the Swiss mobile operators private equity owner

CVC Capital Partners had resumed the exit process it suspended

at the end of 2013.

However, a source close to the situation played down the

newswire report and implied that the suggestion of a

specic process was incorrect, although the operator would

be sold eventually.

CVC bought Sunrise in 2010 fromDanish telcoTDC for

US$3.2bn and a potential sale price for the business of US$5.2bn

has been estimated by themedia, based on the 8x EBITDA

multiple its larger rival Swisscom trades at. In its most recent

results, Sunrise reported US$1bn in revenue for the rst half of

the year and recorded EBITDA of US$168m for Q2,which the telco

said was a 5.7% increase on the same period in 2013.

Sunrise is the second-largest mobile operator in Switzerland.

Earlier this year, it was linked to amerger with rival Orange,

which would take the countrys mobilemarket down from three

operators to two.

A Swiss publication reported that a tie-up could be possible

because themarket environment had improved since cableco UPC

Cablecom launched anMVNO earlier this year.

Sunrise is headquartered in Zurich and also offers xed-line

telephone, broadband and digital TV services.

Sunrise sale talks played down

SWITZERLAND

US-based payments technology giant Visa

has hired JP Morgan to review options for its

5.5% stake in UKmobile payment provider

Monitise.

Visa, which in 2009 secured a 14.4% interest

in Monitise, has over time reduced its stake in

the company.

The move is consistent with its strategy to

seed emerging players before tapering that

inuence as the partner company grows, Visa

said in a statement.

Consistent withVisas increased

investment in our in-house capabilities,

and the substantial growth in Monitise, Visa

is considering its options with regard to its

Monitise stake, commentedVisa EVP of

corporate strategy Bill Sheedy.

Shortly after the announcement, shares

in Monitise fell about 30% to 0.29. As

TelecomFinance went to press, Monetise had

a market cap of 584m.

According to Mark Palmer from BTIG

Research, the evaporation of about a quarter

of Monitises market capitalisation was out

of proportion to its likely impact on the

companys prospects, including its likelihood

to eventually be taken over at a signicantly

higher share price by IBM or another suitor

seeking to enhance its role in the global

mobile money space.

Visa andMonitise also inked a commercial

agreement in 2009, which runs until 2016, for

the provision of mobile platform development

services.

In a statement, Monitise said it will

continue its alliance withVisa and reiterates

it guidance for this nancial year, its

expectation to be EBITDA protable in FY

2016 and its longer-term guidance for 2018.

Visa considers

exit from

Monitise

UK

western europe


MVNO TPO plans

London listing

UK-based MVNO The Peoples Operator

(TPO) is looking to launch an IPO on Londons

junior market AIM in November.

Proceeds from the offering will be used

to grow its online community to gain more

customers, as well as build the infrastructure

required to expand into identied target

countries, particularly the US, according to a

securities ling.

TPO, which is being advised by FinnCap,

declined to disclose the exact size of the

offering or the pricing, although it conrmed

that it would sell a minority stake.

The London-based company, which is

backed byWikipedia founder JimmyWales,

donates 10% of each users bill to a charity

of their choosing. Additionally, 25% of

TPOs prots go to charity through the TPO

Foundation.

The company claims that its business

model is still protable as it relies less on

traditional customer acquisition models,

compared to other market players. Instead,

it looks to secure new customers through a

viral marketing system based on an online

global community, to be developed byWales

who was appointed as TPO vice chairman in

January and also serves as director of strategy

and digital community.

Founded in November 2012, the London-

based MVNO, which is reportedly valued

at about 100m, has more than 10,000 UK

subscribers and provides services using

EEs network.

Commenting on the IPO announcement,

TPO chairman Andrew Rosenfeld said: Our

operating deal with Sprint Corporation along

with Jimmys plans for viral online growth

will, I believe, have a dramatic impact on

revenues and thereby deliver signicant

returns to shareholders.

TPO has recently signed an operating

agreement with US operator Sprint Corp

and aims to launch in the country 2015.

According to the ling, the MVNO

intends to operate only in those countries

that offer competitive wholesale mobile

network prices.

In January,Wales said the company

would be looking to ink MVNO deals and

was seeking partners and investors across

the globe.

UK

Daisy offer

deadline pushed

back again

UK

AIM-listedDaisy Group has again extended

the deadline for a consortium fronted by its

CEO, Matthew Riley, to buy it out.

Riley, asset manager Toscafund and

private equity rm Penta now have until 20

October to formalise their 1.90 (US$3.11)

per share offerto acquire the UK telecoms

and internet provider.

The consortium asked for the latest

extension to consider and nalise certain

aspects of its proposal.

The buyers made a preliminary approach

in late July that valued Daisy at 507m

(US$817m). Under UK takeover law, the

syndicate initially had until 10 September

to make a binding offer but extended the

deadline to 22 September, and then to 6

October.

Riley, who has led Daisy since founding it

in 1991, already has a stake of roughly 23%,

while Toscafund holds about 28.5%.

Penta sold its UK B2B telco SpiriTel to

Daisy back in 2010 for 27m (US$45m).

Liberum is Daisys nominated adviser,

and is also advising on the UK takeover

code.Oakley Capital is its nancial adviser.

Toscafund listed JP Morgan for enquiries.

Daisys shares are currently trading

at 1.83 and the telco has a market

capitalisation of 489m.

Liberty completes All3Media deal

JohnMalones Europe-focused cable

giant Liberty Global and USmedia and

entertainment companyDiscovery

Communications have completed

their joint acquisition of UK-based

TV production and distribution house

All3Media.

Liberty and Discovery agreed inMay

to create a 50:50 joint venture to buy

All3Media from its founders and the

Permira funds.

The deal, which has obtained

regulatory clearance, values All3Media

at about 550m (US$930m).

Commenting on the closure in a

statement, Liberty CEOMike Fries

described All3Media,which produces

content for some of its biggest markets

in Europe, including the UK,Germany

and the Netherlands, as a natural t for

the company and its content strategy.

All3Media comprises 19 production and

distribution companies from across the

UK, Europe,New Zealand and US.

InMay, the company was recapitalised

with what Liberty and Discovery have

described as a structure that provides

for a solid nancial foundation as the

joint venture takes control and All3

Media enters the next phase of growth.

JPMorgan acted as nancial adviser to

Liberty and Discovery on the deal.

The acquisition forms part of Libertys

expansion into EuropeanTVmarkets,

which has also seen it acquire the

UKsVirginMedia and UK commercial

broadcaster ITV.

Meanwhile, All3Media CEO Farah

Ramzan Golant has stepped down

from the role.

A global search for a successor has

begun. COO JaneTurton has been

promoted tomanaging director and will

lead All3Media in the transition period.

UK

Liberty Global chairman John Malone

western europe

CEO: Vodafonemay

look at Liberty bid

Vodafone could consider a

transformational M&A deal in the longer

term and would explore a takeover of cable

giant Liberty Global for the right price, CEO

Vittorio Colao has been cited as saying.

Speaking at a September investor

conference in NewYork, Colao, pictured,

reportedly said efforts to invest inVodafones

networks and consolidation within the

telecoms sector would better enable the

company to make deals in the longer term.

Following his presentation, the CEO was

reported to have said that JohnMalones

Europe-focused cableco may be the right t

for Vodafone, price dependant.

UK-basedVodafone has made a strategic

decision to look for convergence plays in

Europeanmarkets where it already offers

mobile services. The sale of its stake in the US

VerizonWireless for US$130bn last year has

freed up

cash to both develop its networks and

make acquisitions.

Vodafone has since acquired Germanys

largest cableco Kabel Deutschland for 7.7bn,

beating Liberty to the asset, as well as Spanish

cableco Ono for 7.2bn and Greek broadband

and xed-line operator Hellas Online for

72.7m. And this July, the company made

a joint bid with Greek telcoWind Hellas for

Athens-listed alternative xed-line operator

Forthnet.

Meanwhile, there has been considerable

speculation that Vodafone could combine

with a large player such as Liberty, with which

it has competed for cable assets in Europe, or

US telecoms giant AT&T.

An industry banker, however, commented

that Vodafone may be unwilling to be bought

by AT&T. Acquiring Liberty would allow

Vodafone to become a very large group,

therefore deterring AT&T frommaking a move

for the British telco.

Separately, Colao was quoted as saying

at the Goldman Sachs Communacopia

conference in September that UK rival BT

is expected to pursue a similar strategy to

Vodafone.

BT may also discount mobile services

to help push its core broadband offerings.

Colao reportedly contended that such a move

would likely promptVodafone and other

local mobile operators to discount their xed

broadband services.

Colao added he is optimistic that the

new European Commissioners will

address the low return on investments in

the telecoms sector, arguing that mergers

should be approved without remedies

granting other operators wholesale access

to networks.

Gunther Oettinger and Andrus Ansip

were named as the successors to Neelie Kroes

in September as commissioners for the

digital agenda.

UK

Gigaclear gears up for IPO

British rural broadband providerGigaclear

is set to list on AIM, Londons junior stock

market, to expand its network coverage

across the country.

The company said new ordinary shares

will be placed with institutional investors. It

also plans to invite qualifying customers and

existing shareholders to invest in the shares.

Dealings in the shares are expected to

start in October.The company has not

revealed howmuch it plans to raise from the

listing, but according to a local report citing

people familiar with the plans, Gigaclear is

targeting about 20m (US$32.5m).

In themedium term, the operator plans to

invest 180m, including the IPO proceeds, to

build networks serving up to 200,000 homes

in underserved areas across the UK.

Oriel Securities is acting as nominated

adviser and the companys sole broker for

the IPOwhile Cameron Barney serves as

nancial adviser.

Oriel declined to disclose the size of the

stake that will be oated and dismissed any

possibilities of growing viaM&A.

Founded in 2010 byMatthewHare,

the companys current CEO,Gigaclear

operates nine bre-to-the-premises

networks in rural areas.

Another ve are under construction and

are due to be completed by Q4 2014.

UK


Vodafone CEO Vittorio Colao


Guy Ferneyhough: Can you walk us through

the Jazztel acquisition and what you see will

be the benets of owning the Spanish xed-

line operator?

Gervais Pellissier:We think the European

market is clearly now in a phase of in-country

consolidation, in two dimensions. One is the

reduction of the number of mobile players,

like what weve seen in Ireland, Germany,

and maybe in France.

And the other trigger is convergence

between xed andmobile players, or

consolidation amongst xed players. In Spain,

it is not mobile consolidation today: it is

xed-to-mobile, or the reinforcement of xed

operators, as is the case for Orange, which

was already slightly bigger than Jazztel in the

xed business.

GF:What about the three cable operators

in the north of Spain are they of any

interest to you?

GP: I think to us or toVodafone they are quite

small but my feeling is that because these

are cable operators, Vodafone is the more

natural acquirer.

In terms of technology, our basic

technology is DSL and FTTH and we just

rent cable lines fromVodafone.

We wont manage a cable network so I am

not sure we will look at the cable guys in the

north of Spain.

Wemight look at the potential because we

have a long-term relationship with the Basque

one, Euskaltel, but Im not sure it is of great

interest for Orange Spain.

GF:Moving on tomobile, do you thinkYoigo

is an attractive asset?

GP: Yoigo is an asset which has customers,

spectrum, and some infrastructure. Now,

how attractive is that for others? I think

spectrum and customers are always attractive

to anybody, but lets be clear, everybody has

enough infrastructure. Today the question is

even if Yoigo is attractive, what is the price of

that attraction?

If we succeed in acquiring Jazztel, the

view on the pricing of Yoigo might be

slightly different because Yoigo has no xed

infrastructure and depends on Telefonica to

penetrate the xed market.

GF: And as far as four-to-three consolidation

in Spain goes,would you anticipate that

being an issue?

GP:We think that today it might not be such

a big issue, although that is a little more

complex on the regulatory basis than xed-

mobile consolidation.

Curiously, there is always more debate

by regulators on mobile consolidation and

MVNOs, whereas there is too little debate

on cable.We think there is too much focus

on mobile today andmaybe not enough

on cable.

GF: What is your view onTelefonicas deal

with Canal+ in Spain?

GP: The deal is done. It has to be approved

by the regulator, but we have nothing against

that deal.We think the question for other

xed operators especially when they are

alternative is to ensure that they have equal

access to the content.

This is what I think bothVodafone and

ourselves will try to secure with the regulators

so that Telefonica is not creating exclusive

bundles that cannot be replicated by others.

But we have nothing against the fact that

Telefonica can make money in content and

manage content operations

In France, when we decided to invest

into content, we were forbidden by the

antitrust regulator to dedicate our content

exclusively to our customers we had to

open it up.

We think that in terms of nancial ow, it

should remain at arms length, and not create

a pricing differentiation

If you take France again, one of the claims

we have against the merger between SFR and

Numericable is the inequality of access to

content given to Numericable compared to

bre or DSL players.

Numericable has a specic regime to access

content which we cannot replicate today.

GF: On France, how do you see themarket

playing out in terms of consolidation?

GP:We think today that full consolidation, by

which I mean a merger between operators,

Q&A

We need the positive impact

of consolidation in France to

aidmarket repair

Guy Ferneyhough

Senior Reporter,

TelecomFinance

In September,Orange CEO delegateGervais Pellissier also became the companys

head of European operations (excluding France). A fewweeks later, the French

incumbentmade an offer for Spanish fixed-line operator Jazztel. In his first interview

since taking on his new responsibilities, Pellissier talks to TelecomFinance about

convergence, consolidation and the prospects of taking EE public

Source:FranoisMarchalforOrange

is not on the short-term agenda because

everybody has moved on to something else.

Mr Niel [owner of Iliad] [was] chasing after a

very big prey in America [T-Mobile US]; we

have been moving in Spain; Numericable is

at the end of the process of buying SFR; and

Bouygues has prepared its restructuring plan

to become a leaner company, which means

that everybody has different plans for the

short term.

However, consolidation remains a question

and will be brought back to the table.

How quickly? I dont know.What we think

is that before having a merger between

operators, we might have more discussions

to share infrastructure.

That is one way to get more value

creation in the short term: for the different

operators to work together on how to

share infrastructure and how to share the

cost of coverage.

We will see whether the competition

authority nally approves the network

sharing agreement between Bouygues and

SFR, but I think there will be discussions

between everybody to cover the rural areas,

and to deploy faster 4G in some areas.

We are likely to have these small pieces of

agreement that might not be the big deal

we may see in the headlines, but which is a

way to capture some of the synergies that you

would be able to capture in a big merger.

GF: And do you think Orange could be part

of a consolidation deal?

GP: In terms of network consolidation, the

answer is yes. Because we have the biggest

network, we have the biggest platform, and

we are open to discussions.

In terms of a merger itself, what we clearly

stated in July was that we would no longer be

the primemover in a big move.

Why? Because we are the only one that

cannot buy 100% of somebody else without

being obliged to sell a lot of pieces.

Lets be clear, we have not seen the

number one be the consolidator in any

other country.

This is why we have said if some of our

competitors want to do something together

then we are ready to help if we are requested

to do something, but we will no longer

undertake the rst step.

We need the positive impact of

consolidation in France to aid market repair,

but we do not need to be bigger

We have 45%market share in broadband,

we are nearly 40% in mobile, and we know

our room for manoeuvre to go above those

percentages is very limited.

GF: In the UK,what is your position on EE?

A fewmonths back, you said that after the

summer you would look at an IPO again

GP: The position there is very simple. Two

things: One is a question of timing.We have

agreed with our German colleagues to look

again at a ling once they have made their

decision on the US as to whether they stay or

sell, which I think they may decide before the

end of the year.

Regarding EE, I think the question of

the IPO is also linked with xed-mobile

convergence in the UK. If we think xed-

mobile convergence is not something that

needs to be done rapidly then wemight

reopen the IPO project. If, on the other

hand, we think xed-mobile convergence

will really start next year, then wemight rst

work on partnership co-operations, maybe

consolidation I do not know rather than

trying to prepare an IPO.

This is a real strategic question because

neither Deutsche Telekom nor Orange is in a

hurry to divest and get cash from EE.

In the end we will be happy to monetise

some of our shares in EE, but in the meantime

we would prefer to keep the value of the

asset and strengthen its value than to IPO

and then see another big, big convergent

operator created.

GF: Speaking of xed-mobile convergence

in the UK, do you see anything happening

there?

GP: Today, not yet. For B2B it has been a

necessity. BT has signed anMVNO

agreement with us, rst to provide B2B

convergent services.

When you are talking to small, medium-

sized and big companies you need to offer

the whole spectrum of telecoms services,

including xed-line, bre andmobile.

This is the reason whyVodafone has bought

Cable &WirelessWorldwide to have an

enterprise offer that will be able to compete

against BT.

So we think that convergence is really there

in the B2B eld.

Regarding consumer xed-mobile

convergence in the UK, an evolution is

coming, but it is not coming easily as this

means a change in the distribution.

The fact that Phones 4u is under

administration is not only a sign of

something happening specically to

Phones 4u, but also a sign that the

distribution is changing in the UK.

I think independent distributors like

Phones 4u and CarphoneWarehouse were

not a facilitator of convergence.

The ability of a third party to sell a

combined bundle between xed andmobile

is lower than the ability of the operator

himself, because of technical features and

condence of the customer.

The second point is we need to see under

which form BT is proposing quadruple play

they should do that at the beginning of

the year.

And I think those two points will change

the perspective and then we could start to

see convergence.

In terms of customer experience on data,

convergence becomes key because you

cannot have a good customer experience

through the mobile network only.

You needWi-Fi and you need the mobile

network, so you need convergence.

GF:Weve talked about xed-line in Spain

and the UK, touched on France what about

other Europeanmarkets?

GP:We are working on that in Poland, where

we are the incumbent andmoving from

copper DSL.

We will present an FTTH bre plan to the

market and to the Polish authorities before

the end of the year.

And then we have a few countries where we

are mobile only this is the case in Romania

and Belgium.

In Belgium, we have a very interesting

situation as it is the only country in the whole

of Europe where the regulator has decided to

regulate cable and to oblige cable operators

to open up their networks, so we will launch

that in 2015 that is one way to go to

convergence.

GF: And in Poland,Netia is looking for a

mobile partner. Is that something youve

looked at?

GP:Wemight look at it, but I think today the

position of big mobile operators is not to

enter into any MVNO agreements that would

be detrimental to their own business.

Maybe somebody will sign with Netia, but

Im not sure we will sign if it is just a way to

push the prices down again.

We already have very low prices in Poland

and it is not appropriate to continue to play

that game.

Q&A


The fact

that Phones

4u is under

administration

is not only a sign

of something

happening

specically to

Phones 4u, but

also a sign that

the distribution

is changing in

the UK


Slovenian cableco Telemach and Telekom

Austria are reportedly interested in acquiring

Slovenias third-largest mobile operator

Tusmobil.

A local publication quoted Serbian cableco

United Group, which operates in Slovenia

and Bosnia and Herzegovina under the

Telemach brand, as saying the company is

looking at all assets for sale in Slovenia.

These include Tusmobil, Debitel, T-2,

which the District Court in Ljubljana

recently declared bankrupt, and smaller

cable operators.

Unirted, which provides pay-TV, telephony

and broadband services, has reportedly

declined to elaborate as proceedings

are ongoing.

Ljubljana-based Tusmobil could sell for

about 150m (US$188m), the report stated.

Meanwhile, Telekom Austria, which owns

Slovenias second-largest mobile operator

Si.mobil, was also named as a potential suitor

for Tusmobil, which is owned by Slovenian

businessmanMirko Tus Tus Holding.

A spokesman for Telekom Austria declined

to comment on the rumours, citing company

policy. However, he pointed out that its

strategic focus is on convergence and in-

market consolidation in countries it is already

active in.

In Slovenia, we are neither convergent, nor

have we seen any market consolidation yet,

he said.

Meanwhile, a spokesperson for Tusmobil

said the company is not surprised several

companies are interested in buying it as it

has been the countrys fastest-growing mobile

operator for several years. She said: Since it

is our wish to continue to provide our users

with the latest mo

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