A consortium comprising RCS&RDS and Astral Telecom, the two leading players on the Romanian cable market, will take over the fourth-largest competitor - FX Communications (Metromedia) this year, under a $16-18m deal, according to sources close to negotiations.
Discussions on the FX Communications takeover started this spring, and the consortium originally included American group UPC, which then left the negotiations.
"UPC had considered an investment in Metromedia (FX Communications, i.e.), but then decided not to be involved in its sale," Richard Anderson, managing director at UPC Romania told Ziarul Financiar.
RCS&RDS and Astral officials would not comment on information regarding the FX acquisition.
If the acquisition succeeds (an endorsement from the Competition Council is needed), Astral will take over about 55% of the FX clients and operations, with the rest to be absorbed by RCS&RDS, the quoted sources say. Astral will also take over the company's Internet radio division - FX Internet.
The takeover and then the split of FX will be this year's second big transaction on the cable market, after RCS&RDS took over TerraSat this spring, under a deal estimated at $10m ($4.5m in cash). This transaction propelled RCS&RDS to the top spot (22-24% market share) and relegated the previous leader, Astral Telecom, to the second place (20 percent in market share).
FX has more than 100,000 subscribers in three main areas: Bucharest, Deva and Targu Mures. The company's market value ranges between $8-12 million, as each subscriber is generally "sold" for $80-120 in mergers and acquisitions. This price was set in the past years, when the investment funds couldn't get enough of the cable operators.
However, the total value of FX Communications ($16-18 million) also includes FX Internet (which brings annual revenues of more than $1 million, besides the five million dollars obtained from cable TV) and the company's operations in the Republic of Moldova (where it holds SunTV cable operator).
The RCS&RDS-Astral consortium will then resell the operations in the Republic of Moldova, the quoted sources say.
FX Communications, which was called RomSat until this summer, is 100% owned by US trust Metromedia International Group, which established communication companies in Eastern Europe, the former Soviet republics and China.
Metromedia put up for sale its Romanian-based business early this year and FX Communications also caught the eye of two investment funds, the above-mentioned sources stated.
But why are companies so keen on buying FX Communications which, although ranking fourth in Romania, only has 4-5% market share? According to some market players, FX Communications has the best technological equipment of all the cable TV companies. Furthermore, FX Communications is the only Romanian CATV operator providing five sets of programmes. According to the same sources, the company is also coveted for the team's know-how. Moreover, FX Communications covers the rich residential Bucharest districts, able to generate high revenues.
laurentiu.ispir@zf.ro ; iuliana.susanu@zf.ro
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