Telecommunications operator RCS&RDS, controlled by Oradeabusinessman Zoltan Teszari, 41, is one step away from buying rivalUPC, formerly Astral, its fierce rival for over 15 years on thecable market, in a transaction that could amount to around 300million dollars.
According to market sources, Teszari - who holds 43% inRCS&RDS, is in the process of selecting the investment bank forthe financing of this transaction which, if concluded, wouldfundamentally change the entire Romanian telecom market, which isextremely fragmented and where competition is extremely tight. Theother shareholders of RCS&RDS are investment funds Epic andQuadrant and a few Romanian businessmen and managers of thefirm.
Teszari has had talks with investment banks since the end oflast year, which included Goldman Sachs, Credit Suisse and MorganStanley, in order to structure such a transaction. He is now in theprocess of selecting the bank that will go ahead. Talks are held inVienna. Bankers should offer RCS&RDS, a company with revenuesin excess of 700 million dollars, financing both for theacquisition and for rescheduling debts that RCS&RDS is due topay in the coming period. This year the company needs to pay back175 million dollars, and, according to market source, "the problemis solved in part".
Liberty Global, UPC shareholder, last year hired investment bankRothschild to find solutions for UPC Romania, which in 2004 boughtlocal cable operator Astral for 400 million dollars.
Whilst in 2005 UPC became number one on the cable market, "thestreet fight" that followed was won by RCS&RDS through anextremely aggressive pricing policy and by attracting customers atany cost. After five years of fighting, RCS&RDS has nearlythree times as many cable TV customers as UPC. So Liberty needs tofind a solution, and, according to the quoted sources, it could bewilling to sell Romanian operations. Whilst the first time thatRothschild went looking for potential interested parties, notelecom group was wiling to pay the 700 million dollars asked bythe seller, the current 300 million dollars seem a much morereasonable price, and RCS&RDS is about to make a move thatwould stun the entire telecom market.
If the two rivals were to become one, it would create a"monster" on the Romanian market, with four million customers onthe television segment alone, 1.7 million customers for fixedtelephony, 1.4 million for mobile telephony and 1.4 million forfixed internet services.
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