Quietly, without making any fuss, the top three players on the Romanian cable TV market are preparing to put their rivalries aside and bury the fourth competitor. Two foreign investment funds are also in the picture, having been lured by a deal that could be worth $8-12 million. At least this is what market sources say. However, it is almost certain that we shall witness this year's second significant consolidation in the CATV industry by fall. Are we heading straight for a "duopoly" in this sector, just like in mobile telephony? #leadend#
It's only been three months since the spectacular hierarchy upheaval on the cable TV market, when RCS&RDS acquired TerraSat. The deal, which sources estimated at some $10 million ($4.5 million in cash) propelled RCS&RDS to the leading market position (22-24% market share) and pushed the former leader, Astral Telecom down to the second place (20% in market share).
The transaction was managed by investment bank Communications Equity Associates, specialising in communications and media. The institution is now busy negotiating the sale of FX Communications, the fourth-largest cable operator on the Romanian market. FX Communications, known until recently as RomSat, is 100% owned by US trust Metromedia International Group, which developed communications companies in Eastern Europe, the former Soviet republics and China.
The bid-submitting deadline for FX Communications expired on July 1, with the buyer to be selected in 60 days. According to market sources, the top three cable TV operators in Romania - RCS&RDS, Astral Telecom and UPC - have submitted separate bids, but agreed to buy FX Communications "jointly," and then divide the networks. Each of the three operators could then take over the areas they are interested in.
According to sources close to negotiations, two investment funds have also submitted bids for FX Communications. It is worth noting that investment funds generally have extensive experience in developing Romanian cable companies: EPIC (Austria) and Quadrant (US) own 30% in RCS&RDS, while AIG New Europe Fund controls about a quarter of the Astral Telecom shares.
According to some market players, FX Communications has the best technology of all the cable TV operators. FX Communications is the only CATV operator in Romania that offers five structured programme packages, while its competitors still have a lot of work to do in the field of customised services. According to the same market analysts, FX Communications is also appealing due to the team's know-how. Moreover, the company covers the rich residential areas of Bucharest (such as Floreasca), which can generate high revenues.
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