Telekom Austria targets Bulgarian cable

Telekom Austria is investing €72 million to acquire a pair of Bulgarian cable operators to cash in on growing demand for converged services in the country.
The firm said purchasing Megalan Network and Spectrum Net will position its Bulgarian subsidiary Mobitel to tap into predicted strong growth in fixed broadband, IPTV and convergent products, with the first services due to launch this year.
It is financing the acquisitions from existing cash flows, and will pay in installments until the full amount is outlaid by end-2011.
Penalty clauses could see the price fall by €14.5 million if the pair fail to meet Telekom Austria’s performance criteria.
“The convergence of fixed and mobile communication has become a key feature of the telecommunication market,” Hannes Ametsreiter, Telekom Austria CEO stated. “Against this backdrop, the planned acquisition of two fixed net operators will be a natural next step for Mobitel.”
Megalan offers residential broadband and IPTV services, while Spectrum focuses on business customers with a mix of broadband, voice and IT services. The pair generated combined revenues of €25.3 million in 2009, and EBITDA of €7 million.
Telekom Austria says Bulgaria’s fixed-line market offers good opportunities for growth, despite currently having the lowest broadband penetration of all European Union member states.
However, pay TV penetration stands a 72%, and IPTV is forecast to penetrate 32% of the country by 2019 as the number of broadband users almost doubles.
Separately, Telekom Austria contracted Nokia Siemens Networks to update its radio networks in Austria, Liechtenstein and Slovenia, and to deploy 3G services in Serbia and Belarus.

The five year deal also provides an upgrade path to HSPA and LTE, NSN said.