Market Insight

Multimedia Polska plans IPO to raise investment funds

March 27, 2014


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Multimedia Polska is planning an IPO on the Warsaw Stock Exchange (GPW) in the second quarter of this year. This is a necessary move for the cable operator - the third biggest in Poland - to be able to compete with the local subsidiaries of media giants such as Liberty Global and Vivendi who have access to substantial amount of quick credit. The existing shareholders - M2 Investments Limited, Tri Media Holdings Limited, Dunaville Trading Limited and Collegium Anetta Kolasinska i Wspolnicy - will be offered 49.2% of the newly-issued shares.

The statement released yesterday (http://www.multimedia.pl/raporty_EBI_2014) said that the IPO would go ahead when market conditions are appropriate, without specifiying an exact date. Multimedia Polska have hired a number of top investment banks to assist the offering: UBS was appointed as the global co-ordinator and underwriter, UniCredit and Raiffeisen Centrobank were selected as joint lead managers.

Our Take

The introduction of online home monitoring services by Multimedia Polska in January 2014 and the successful integration of their OTT service (mmtv.pl) onto various tablets and smartphones illustrates how ambitious this Polish cable company is. The IPO should allow Multimedia Polska to raise capital which can be invested into the development of these new products as well as cable and fibre-optic infrastructure; such investment can increase ARPU by increasing product quality. In 2013, the company invested PLN 189.8 million (€45.37 million), PLN 175 million (€41.83 million) of which were spent on the expansion and modernisation of the network, increasing cable internet bandwidth and implementing new services. The company is also very likely to invest into its IPTV, OTT TV (mmtv.pl) and mobile telephony services which are currently provided using Polkomtel’s infrastructure. IPTV and OTT services will help the company to reach the rural regions which currently have poor cable infrastructure.

The timing of the announcement is not surprising as a large number of private cable companies in Europe are raising funds through equity as by providing broadband packages they are likely to eventually raise more than the satellite TV and telecom companies. The fact that the broadband cable infrastructure is already in place is likely to make their valuations higher.

Multimedia Polska has around 600,000 subscribers, around 200,000 less than Vectra, the second-largest TV operator, and around half of the number of the market leader, UPC Polska. (UPC Polska has around 1.24 million subscribers and is owned by Liberty Global).

The company is attempting to increase the number of subscribers as well as the number of RGUs per subscriber by improving quality and providing double-play and triple-play bundles at competitive prices. It is likely to concentrate on the latter which is very common in the European cable TV industry. This IPO will also provide the funds which are necessary to market such relatively new bundled packages.

Every IPO is risky, but this one may drastically improve Multimedia Poska’s revenue and market share. The success of the IPO will be highly dependent on the implementation of the company’s goals which will be scrutinised by investors through key performance indicators.

Organization
Multimedia Polska
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