Unconfirmed reports from TMT Finance say that Germany’s Deutsche Telekom (DT) is now the sole only remaining bidder for GTS Central Europe, a group which specialises in the delivery of enterprise and wholesale telecommunications business in central and eastern Europe.
Sources said DT was now considered the frontrunner, after several other prospective buyers pulled out of the process which is being run by Goldman Sachs. In June this year GTS Central Europe – which has operations in the Czech Republic, Hungary, Poland, Romania and Slovakia – appointed Goldman Sachs to explore the possible sale of the company. It was understood at the time, that under the plan the global investment banking and securities firm would ‘assess appetite for buyers and review a range of options including a complete sale’ for GTS’s shareholders, which comprise a private equity consortium of: Columbia Capital, M/C Venture Partners, Innova Capital, HarbourVest Partners, Oak Investment Partners and Bessemer Venture Partners. One unnamed source was quoted in June as saying: ‘The company has been looking at a straight sale to gauge appetite from prospective buyers, but it’s my understanding that other options are also being put on the table, such as a refinance, a restructure, or a partial sale of the company.’
TMT Finance notes though, that although Polish telco Netia was working with a private equity group concerning a bid for GTS’s Polish assets, it has subsequently abandoned its interest. Further, the investment group PPF was linked with a bid for GTS’s Czech assets, sources said, with the likes of Turk Telekom also mentioned as a likely suitor. The online journal says that Morgan Stanley is thought to be aligned with one of the buyers in the Czech bid.
Industry watchers suggest however, that GTS Central Europe’s shareholders are struggling to come to an agreement on the expected valuations of the various assets, which is hampering any concrete sale agreement being reached. Despite this, DT – which is believed to have adopted a strategy to boost its position in eastern Europe – is seen as the frontrunner for GTS. Its owners are targeting a deal equivalent to 5.5/six times EBITDA which, based on its FY2012 figures, equates to EUR566 million-EUR618 million (USD751 million to USD820 million) – which the market now considers could be too high. Unnamed bankers told the journal that a final price is likely to be more in the range of EUR450 million-EUR500 million.
GTS owns and operates a fibre-optic and data-centre network throughout central and eastern Europe. It offers voice and data services across its operational footprint; assets include a 26,000km fibre network, 15,000 on-net buildings and 14 data centres. Since 2005 the group has been consolidating its footprint in the region, snapping up a number of smaller telecoms providers including: Aliatel, Contactel and Sitel (all Czech Republic); Telenor/Nextra, Quadia and Dial Telecom (all Slovakia-based), Interware in Hungary, Romanian group Donation and Energis Poland. The current owners acquired 100% of the company in 2008 from Group Menatep Limited (GML) for about EUR420 million.