Basque cable operator Euskaltel has bought Galician R Cable for €1.155 billion - 10.9 times R’s EBITDA. The Galician cable operator is currently 70% owned by private equity firm CVC and 30% controlled by Galician savings bank Abanca. The deal comprises cash and new shares in Euskaltel.
This marks the latest consolidation move in the Spanish telecommunications market, following Vodafone's purchase of cable operator Ono, Telefonica's acquisition of PRISA's satellite operation Digital Plus, and France Orange buying Jazztel.
Spain is a small pay TV market with only 29% of TV households subscribing to pay TV services. The biggest pay TV operator in the country is Telefonica, which had 1.9 million IPTV subscribers at the end of 2014 and 1.6 million TV subscribers through its acquisition of satellite operator Digital Plus earlier this year. With its combined 3.4 million TV base Telefonica now has more than 51% of the pay TV market in Spain.
At the end of 2014, seven percent of TV households in Spain had cable TV, amounting to 1.2 million television homes.There are four cable companies in the country, of which three are independent operators in the north of Spain: R (Galicia), Telecable (Austurias) and Euskaltel (Basque country). These companies hold a total cable market share of 34%. The remaining 64% of Spain's cable sector belongs to Vodafone's Ono, which is the biggest cable operator in the country, with 0.8m cable TV homes.
The acquisition of R by Euskaltel will create a network of 560,000 unique cable homes, compared to 2 million cable homes in the Ono/Vodafone network. Of the combined 560,000 cable homes, 300,000 are cable TV customers. If further consolidation is to take place in the long term, it would most likely be led by Vodafone, which could seek to take over all the cable infrastructure in the country. If this occurs, the Spanish pay TV market would be divided between Telefonica and Vodafone.
Euskaltel's agreement for the purchase of R is still pending regulatory approval.