Next fixed line contestant
By Timothy Sifert
Raiffeisen Investment's (RI) planned purchase of alternative telecom El-Net could pave the way for at least one element of the ongoing preparations to drum up competition for Telekomunikacja Polska SA (TPSA).
Austria's RI, in a consortium with private equity houses, expects to buy 100 percent stake and liabilities of El-Net from Elektrim Telekomunikacja and banks this month. Should the deal go through as planned, RI also sees a role for itself as an industry consolidator, which could eventually merge El-Net with Telefonia Dialog, which has been on the blocks for some time.
"Raiffeisen sees a good opportunity," says Radosław Solon, analyst at BDM PKO BP. He explains that in its present state, the country's telecom industry has no possibility of creating a viable competitor for TPSA. But with RI stepping in and alternative provider Netia looking to buy Tel-Energo, some challengers might be taking shape. The combined efforts of an RI-led and a Netia-led competitor could wrest some of the control TPSA has over the country's fixed-line market.
"We are interested in organic growth, but one should not forget about the unavoidable market consolidation process," says Martin Schwedler, an RI board member. "With strong financial backing El-Net should be active in this field."
Analysts say the RI's is a positive move for the industry as a whole, especially because El-Net would be wholly owned by financial investors, instead of strategic investors or the state; both groups have stalled progress from being made for some time. In that, El-Net would mirror Netia. Financial investors Montpelier Asset Management (6.14 percent), SISU Capital (6.89 percent) and Griffin Capital Management (5.94 percent) own Netia. At the same time, 81.02 percent is floated on the Warsaw Stock Exchange. "The only possibility is to merge the assets," says Solon.
And with Netia's stated interest in buying Tel-Energo, despite conflicting news that the sale was cancelled, there seems to be a chance in the very near future for two companies to take advantage of. The RI consortium would buy El-Net, and then buy Telefonia Dialog. And Netia would buy Tel-Energo, plus whatever other assets it plans to chase.
But much of this has been debated before, and Michał Marczak, analyst at BRE Bank, wonders whether the RI-consortium would be able to pay for Dialog. "I am not sure if Raiffeisen has the money to buy the other asset," Marczak says. He cautions that for its stake, KGHM would look to raise as much as zł.700 million.
RI's Schwedler was unavailable at press time to discuss how the consortium might pay for further consolidation in the industry. Nonetheless, analysts say that there would be little sense in RI paying for El-Net, but then not buying other concerns. El-Net, like some other telecom assets in the country, is in a weak financial state largely owing to its zł.1.5 billion debt.
What's more, RI's move comes as industry professionals are still considering what might be the implications of Deputy Treasury Minister Tadeusz Soroka's statement that the government is still mulling over creating a TPSA competitor of its own.
