Deutsche Telekom swallows Liberty Global’s Austrian cable firm for €1.9bn

03 January 2018 | Alan Burkitt-Gray

Deutsche Telekom has made its second European acquisition in a few weeks by buying Liberty Global’s Austrian operation for €1.9 billion.

The company said it will merge UPC Austria – the country’s largest cable operator – with its own T-Mobile Austria, to create a quad-play company that will challenge A1 Telekom Austria, the incumbent.

"With this acquisition Deutsche Telekom is taking another major step to realize our strategy to become a fully converged operator in our European footprint," said Srini Gopalan, Deutsche Telekom’s board member for Europe.

"The acquired cable network will be a perfect match with our best mobile network. It will allow customers to benefit from extended scope of services with fixed and mobile offerings from one source. We see a significant potential to accelerate growth in the Austrian market."

The move comes days after Deutsche Telekom announced a plan to buy Tele2’s Netherlands operation for €190 million. Tele2 will have a 25% stake in the combined fixed and mobile operation in the Netherlands.

T-Mobile has 5.2 million customers in Austria, while UPC’s network in the country passed 1.4 million homes and served 654,000 customers. Of those, 513,000 took broadband – making UPC the second biggest in the market after A1 Telekom Austria. UPC’s customers take 450,000 voice and 468,000 video services. It also has 56,000 mobile customers, provided via a mobile virtual network agreement with Hutchison, which operates its own Three brand.

According to Deutsche Telekom, the combined revenue for the two operations in Austria will be €1.2 billion. Andreas Bierwirth, CEO of T-Mobile Austria, said: "Broadband is the indispensable foundation for a digital Austria. It is our ambition to provide our customers, whoever and wherever they are, with the best possible seamless broadband experience for all of their needs through LTE, digital cable, fibre and future technologies like 5G."

Deutsche Telekom will acquire UPC’s dense urban fibre network in Austria to add to its own fibre core network. It will continue to use the UPC brand for up to three years after the deal is complete. The companies said they expected the takeover to close in the second half of the year, subject to regulatory approval.

Liberty Global CEO Mike Fries said: "This transaction highlights the strategic and financial value of our fibre-rich networks in a rapidly converging world and the significant synergies inherent in fixed-mobile mergers. We have operated in Austria for over 20 years and are extremely proud of the market-leading position we’ve built in both digital video and super-fast broadband."

Fries added: "We believe the combination of UPC Austria and T-Mobile Austria will provide the national scale necessary to compete with larger companies like A1, and provide residential and business consumers with the highest quality services at the best price."

● Liberty Global announced that its Liberty Latin America operation yesterday became a legally separate company. Shares in the new company, which has annual revenues of $3.7 billion, will be publicly traded on Nasdaq.

The new Liberty Latin America includes Cable & Wireless Communications and its subsea network, as well as a cable and telecoms business in Latin America and the Caribbean plus the Seychelles.

"The split-off of our Latin American and Caribbean operations from Liberty Global will ensure that this new company will have access to the capital and resources necessary to achieve superior financial and strategic growth," said Fries, who is and executive chairman of Liberty Latin America as well as CEO of Liberty Global.

Balan Nair, president and CEO of Liberty Latin America, said: "We see significant prospects for long-term growth both organically as well as through strategic M&A."


Topics: Deutsche Telekom, Austria, T-Mobile, Liberty Global, UPC, merger, cable, mobile, Tele2