Market Watch

Cable TV Consolidation Steps Up in Central and Eastern Europe


Display Driver IC Forecast


The consolidation of cable TV platforms in Central and Eastern Europe has continued, with mergers recently being agreed in several countries in the region.

  • Alternative telco Invitel, owned by Mid Europa Partners, has acquired the fourth largest cable TV player in the country, FiberNet, and has also agree to sell UPC one third of the FiberNet network. Invitel provides telephony, internet and IPTV services. At the end of the third quarter of 2010 it had about 15,000 TV subscribers.
  • In Poland, telecommunications company Hyperion has been given a green light by the local competition authority to acquire Stream TV. Hyperion will buy 77.27 per cent of Stream's shares, paying 92.5 PLN million (about €23 million) to its current owner Penta Group. Hyperion is to receive a PLN 240 million bank credit, part of which will be used for buying Stream, and part might be used for further acquisitions. The company is interested in the acquisition of the fourth largest cable TV player in the country, Mid Europa Partners-owned Aster, which has been put on sale. Due to this possible buy-out Hyperion is currently negotiating with some undisclosed investment groups in order to enter a financial partnership.
  • Ten Bulgarian IPTV and cable TV operators have merged to form a group called Bulgarian Telecom and Television (BTT), claiming to have one million homes passed with 150,000 subscribers in 110 cities across the country.
  • In Latvia the two largest cable TV players, Baltkom TV and IZZI, were cleared to merge by the Competition Office. Earlier this year Baltkom also bought the country's fourth largest cable TV player, Televideotikls. The new company emerging from these mergers will have about 75 per cent of Latvia's cable TV market, creating a strong competitor to incumbent telco Lattelecom, which in addition to internet and telephony also provides pay TV services on DTT and IPTV platforms.

Analysis
Typically, markets in central and eastern European are highly fragmented (with 600 cable operators in Poland, 500 in Romania, over 300 in Hungary). In every country in the region a bulk of the cable TV market is held by a group of large operators providing triple play and rolling out digital services. Consolidation is being driven either by large players merging between themselves (recent examples include MTS buying Multiregion in Russia and CableTel merging with Eurocom in Bulgaria), or buying smaller players. Co-operation between smaller players, along the lines of Bulgaria's BTT, has already happened with Viginta in Lithuania, Odeko Group in Ukraine, and Nej TV in the Czech Republic (which with backing from BKS Capital Partners is buying out smaller players). Romtelecom (Romania's incumbent telco, owned by OTE, also provides satellite TV and IPTV, investing in cable through its subsidiary NextGen).

Overall, the consolidation process is going relatively slowly. It typically requires long-term investment in network upgrades and roll-out of new services. Some investors have already turned a profit: for example, Liberty Global bought Slovenia's Telemach in 2004 and sold it last year for $119.5m, making a 30 per cent return. In most markets, cable has already reached maximum penetration, making the acquisition of other players the only way to expand.The investor groups most active in the region are Mid Europa Partners, Liberty Global, BKS Capital Partners, Providence Equity Partners, EQT 5 and two companies managed by Sigma Blayzer, UGF III and SGF II.

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