RCS&RDS buys TerraSat and changes cable television market hierarchy

Autor: Victor Kapra 02.04.2003

The hierarchy of the top five cable television operators has changed. The fourth-largest company on the Romanian cable TV market, TerraSat, was acquired by number two - RCS&RDS group. Hence, the former market leader - Astral Telecom now ranks second. The cable TV industry has a new leader: the RCS&RDS group, which now holds some 22-24% of the market.
RCS&RDS yesterday said it had reached an agreement to buy 100% in cable company TerraSat.
The sole shareholder of TerraSat, Ilie Stoichescu, is now a member of the RCS&RDS Board and will fill the position of administrator. Stoichescu got $4.5 million in cash, but also some shares. How much does he own in RCS&RDS? "We still have to make some calculations, so I cannot tell you exactly how much. At any rate, I will obviously be a small shareholder," Stoichescu stated.
The two parties did not disclose the exact value of the transaction, but market sources say it revolves around 10 million dollars. TerraSat has 150,000 subscribers, while every subscriber is generally "sold" for 80-100 dollars in the CATV mergers.
The deal was brokered by the Munich-based branch of US investment bank Communications Equity Associates, established in 1973 and specialised in transactions on the communications market. According to market sources, Stoichescu had been shopping for a buyer for three years.
Ilie Stoichescu turns 35 today. He created TerraSat in 1991, with 70,000 Deutsche Marks, and has come to hold about 5% of the cable TV market, after 12 years in business. The company operates mainly in south-western Romania: Pitesti, Craiova, Turnu-Severin, Resita.
"I did not sell TerraSat to get some money," Stoichescu explains. "I sold it because investments are needed to modernise the CATV networks and, why not, to enter the fixed telephony market. We did not manage to attract this kind of investments. Still, there is a good chance now, because it is easier to talk to investors when you are No. 1 or 2 on the market."
What will Stoichescu do with his millions of dollars? "I will not do anything on the stock exchange, for now. However, I own a transports company, TransCondor, the fourth-largest on the market, which I think is perfect for investments."
Aurel Costea, Astral Telecom general manager, says "there has never been a war over the number of customers" between RCS&RDS and his company.
"We welcome this move on the cable communication market, as it has been quite numb for a while. The acquisition of TerraSat by RCS&RDS is a good sign for this industry. We have always said we support mergers, because they lead to growth and a high potential for investments and development," Costea told Ziarul Financiar.