Market Watch

Poland's TP Emitel Sold to Private Equity Company


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Private equity company Montagu Equity Partners agreed to pay 1.7bn zlotys (€425m) for Poland's transmission company, TP Emitel, from incumbent telco TP SA group.

Montagu, whose shareholders include HSBC, has investments in a range of market sectors, including transportation, electronics, healthcare, and finance. The acquisition of TP Emitel is the group's first investment in Poland, and its first media investment in Central and Eastern Europe.

TP Emitel, in addition to providing analogue TV transmission services to Poland's national TV channels, operates Poland's two DTT multiplexes. The operator has about 750 transmitters across the country and is continuing to work on extending DTT platform coverage. By 30 April 2011, multiplex 2, broadcasting five national commercial channels, will reach 45 per cent of total homes, and 94 per cent by the end of 2011. The coverage of multiplex 3, which is a transitory multiplex dedicated to public broadcaster, TVP, will not be extended before analogue switch-off in mid-2013.

Multiplex 1 launched in the last quarter of 2009 but remains officially a test as TVP was deemed not to have fulfilled licence conditions by the regulator. The multiplex broadcasts three TVP channels and licences for four more channels are a subject of a tender with 17 participants.

Analysis
The development of DTT in Central and Eastern Europe has attracted new investment recently, with many ready to invest in transmission companies. In August 2010, investment group Mancelord bought 50 per cent of the shares in Bulgarian transmission company, NURTS, owned by Bulgarian incumbent telco, Vivacom. At the end of 2010, Mid Europa Partners and Al Bateen Investment, co-owners of Czech transmission company, Ceske Radiokomunikace (CR), sold it to Australian investment bank, Macquarie, for a total €574m.

The difference in price for CR and TP Emitel reflects the difference between the progress DTT has made in Poland and Czech Republic. Czech multiplexes 1 and 2 currently cover nearly all the population, whereas in Poland considerable investment will have to be made to extend the DTT network.

DTT has been late to launch in Poland, and penetration appears unlikely to exceed ten per cent by the time of analogue switch-off. No information campaign has yet launched, and no money has been found to subsidise set-top boxes. Also, not all the capacity of multiplexes 2 and 3 is being used.

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