Remarkably Poland, with 38 million people and around 14 million TV households, is a hotbed of pay TV, so much so despite Liberty Global’s UPC being the clear cable market leader there, it feels the need to round up further cable subscribers through acquisition. In Poland there are two satellite DTH rivals, Cyfrowy Polsat and Cyfra+ (CanalSat) as well as IPTV offerings arriving from the incumbent telco, and from France Telecom with bouquets both on IPTV and over satellite.
So this week, Liberty Global snapped up Aster, the 4th ranked cable operator in Poland, from UK private equity group Mid Europa Partners, paying around $292 million (€218 million) for the company, but also taking on €383m of existing debt with the deal, making it worth €601 million or $795 million. With just 368,000 subscribers, around $2,160 per home.
Partly we can see this as a reaction to the Polish market, with around 10 million or more pay TV homes, some 70% penetrated, underpinned by the immensely popular, Cyfrowy Polsat, which also owns some of the major Polish TV Channels, and reaches some 3.2 million homes. But partly this is simply because, as we made a case last week, private equity is trying to get itself out of cable right now and you can take that one of two ways, this is because public exits are currently high or because no other private equity players want to keep something as fragile as Pay TV on their books right now.
Mid Europa Partners (MEP) has been something of an acquirer for UPC in the past, with MEP selling Czech cabler, Karneval to UPC back in 2006 and recently (2009) buying Slovenia’s Telemach from UPC. It looks like UPC uses private equity groups to ‘tidy up’ the finances of promising cable acquisitions, and sort out their debt obligations. Sometimes it is easier for a private equity group to do this than a US public company with billions behind it. Recently both were involved in acquiring a piece of Hungarian cableco FiberNet, after one of MEP’s investments, Invitel had bought it.
The Aster deal will only shift 3.5% market share in UPC’s direction. But Poland is one of the rare markets in Europe where UPC has managed to build its customer base in the last year or so, despite the intense competition in Poland.
Aster has around 92,000 of its subscribers as digital subs, and has a further 177,000 internet and 70,000 fixed telephony subscribers within the customer base.
There are other markets such as Belgium, Denmark and the Netherlands, which are more deeply penetrated by Pay TV than Poland, but only Germany, France and the UK appear to have more subscribers in total, in Europe.
A week earlier MEP sold its Total TV satellite operation in Croatia to a subsidiary of the Austrian utility company BEWAG.
Number 3 cable operator Vectra also bid for the Aster assets, which would have grown the group by around 50%, but UPC clearly outbid it.