Telecom Finance 227

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Issue 227 October 2014

Telcos yet to unlock full potential of M2M
The definitive news source on raising finance

Join us at the 10th

The Guoman Tower Hotel
London, UK
Thursday, 5th February 2015

Conference & Awards 2015

Now in its 10th year, the TelecomFinance Conference remains the
leading London-based industry event for decision-making executives,
advisers, investors and officials in the global telecoms space.
Exploring ongoing key industry themes, including M&A, regulation and
finance, the event also examines future revenue streams as telecoms
become ever more commoditised and challenged by advances in
other communications technology.
Key themes in our 2015 programme include:
❒ The new European Commission’s take on continental champions
❒ The return to big convergence
❒ Monetising infrastructure – where does it end?
❒ Fibre: the undercover, unregulated side of telecoms
❒ Investors’ new darling: satellite
ur panels
Book your delegate pass now to join the debates with our
of industry leaders, including:
Hythem El-Nazer, Principal, TA Associates
Steve Collar, CEO, O3b Networks
Karim Michel Nasr, CEO, Digital World Capital
Anntivh Year
Andrew Cole, Director, Liberty Global


Book your delegate pass now via: Web:
Tel: +44 (0) 207 963 7695 | Email: [email protected]
For sponsorship opportunities contact us:
Tel: +44 (0) 207 963 7940 | Email: [email protected]

Untapped M2M and
IoT opportunities
issue 227 October 2014



Western Europe

Orange moves for Jazztel
Tele Columbus IPO on ice
Altice pursues PT

16 Q&A: Orange head of Europe
Gervais Pellissier
18 Eastern Europe

18 Operators eye Tusmobil
20 PPF asks O2 CR for US$1.1bn loan
21 PM backs Telekom Slovenije sale

22 Middle East / Africa

22 Oi to sell Africatel
23 BTCL IPO in November
27 Viettel to enter Tanzania

28 Asia

28 STP buys XL Axiata towers
31 Softbank’s Alibaba stake worth

36 Americas

37 Oi CEO steps down
39 Vimpelcom exits Wind Mobile
42 Iliad gives up on T-Mobile US

47 REIT opportunity
48 Special report

IoT and M2M market

50 Mandate table
53 Networks

Pauline Renaud
[email protected]

Senior Asia correspondent:
Jason Rainbow
[email protected]
Senior reporters
Lorna Thornber
[email protected]
Guy Ferneyhough
[email protected]
Valeria Camerino
[email protected]
Sales manager:
Jeff Jones
[email protected]
+44 207 963 7940
Subscriptions manager:
Dave McCall
[email protected]
+44 207 963 7659
Design / production:

Luke Thornhill,
Richard Preston

For information call +44 (0) 20 7963 7695
The Press Association Ltd
292 Vauxhall Bridge Road, London, SW1V 1AE, England
Registered office: 292 Vauxhall Bridge Road, London, SW1V
1AE. Registered in England No 5946902
No part of this publication may be copied, photocopied or
duplicated in any form or by any means without prior written
permission from the publishers.
ISSN: 1352-6456 VAT No 590 6285 16
© 2014 The Press Association Ltd

Operators across the globe are increasingly
foraging adjacent markets as they aim
to become all-round, diversified players.
Softbank’s recent investments in Legendary
Entertainment and DramaFever, and Liberty
Global’s purchase of All3Media are the most
recent examples of telcos strengthening their
content strategy.
Yet one sector remains relatively untapped
by operators: machine-to-machine (M2M)
and, more generally, the Internet of Things
(IoT). This industry, which encompasses
all sorts of services involving the wireless
connection of devices to the internet, is a
potential goldmine if Cisco’s figures are to be
believed. According to the network systems
company, the sector is set to become a
US$19trn global opportunity by 2024.
Telecoms providers are in pole position
to make the most of IoT: comprehensive
wireless network coverage is key to
connecting cars, homes, utilities etc., to
mobile phones and other similar devices.
Yet, in the last couple of years, Verizon
Communications and Vodafone were the
only notable operators to have been active
in M2M M&A deals.
In July 2012, US telco Verizon bought
Hughes Telematics, a maker of wireless
systems for vehicles, in a US$612m deal. At
the time, John Stratton, president of Verizon
Enterprise Solutions, commented: “Machineto-machine services are beginning to play a
vital role reshaping the business landscape
and setting new consumer expectations
about establishing valuable connections in
their vehicles, their homes and the world
around them.”
It took a further two years to see another
telco conclude a similar deal. In August
2014, UK operator Vodafone acquired Italian
vehicle tracking and telematics group Cobra
Automotive Technologies for €193m. The
telco described the acquisition of Cobra as
being in line with its strategy to expand its
M2M offering, backing up the purchases of
Zelitron, Device Insight and X-Link.
But these companies are the exceptions to
the rule, as most other operators have so far
opted for M2M partnerships instead.
“This approach provides a fast route to
market, but gives the operator limited control
over the service and only a small share of
revenue,” explains Tom Rebbeck, research
director at Analysys Mason.
A few failures have so far deterred many
telcos from opting for the M&A route, but
acquisitions are the only way forward for
those looking to make the most of M2M,
Rebbeck asserts. “Telecoms operators need
to decide how seriously they want to make
a play in M2M,” he says. His special report
on telecoms operators and the IoT and M2M

Pauline Renaud


market is on pages 48-49. While M2M M&A is
still relatively subdued, convergence deals are
on the up, as illustrated by Orange’s recent
€3.4bn bid for Spanish fixed-line operator
Jazztel. With this offer, the French incumbent
aspires to become Spain’s second-largest
fixed-line broadband player. For this edition
of TelecomFinance, senior reporter Guy
Ferneyhough secured an exclusive interview
with Gervais Pellissier, Orange CEO delegate
and, since September, head of European
operations. Besides detailing the company’s
rationale behind the Jazztel offer, the senior
executive also discussed Orange’s strategy
in several of its European markets, stressing
the importance of convergence. The full
interview is on pages 16-17.
Elsewhere in Europe, Altice is also
positioning itself for a potential
consolidation deal. The telecoms holding
already owns fixed-line assets in Portugal
and is now understood to be setting its sights
on the country’s incumbent, Portugal
Telecom (PT).
PT’s parent company, Brazilian telco Oi,
has so far remained evasive about its plans
for the operator, only stating that it may sell
some assets. In Brazil, however, Oi seems
more determined. Its interim CEO Bayard
Gontijo was quoted as saying that a merger
with a Brazilian rival would speed up its
financial recovery, with TIM in its line of
sight. CFO Gontijo replaced Zeinal Bava,
who resigned in early October, further
fuelling speculation that the Oi-PT merger
could unravel.
Also, in this issue, Guy Ferneyhough looks
at real estate investment trusts (REITs) and
how spinning off assets into such trusts could
help fixed-line and cable operators unlock
significant value. The feature is on page 47.
Finally here in London our events team
has been busy signing up speakers for
TelecomFinance 2015, our annual conference
which will take place for the 10th time on 5
February. We are delighted to confirm that
Steve Collar, CEO of O3b Networks, Andrew
Cole, a director at Liberty Global, Hythem ElNazer, principal at TA Associates, and Karim
Michel Nasr, CEO of Digital World Capital,
will be among the telecoms deal makers,
executives and industry experts discussing
the sector’s hot topics at the Guoman Tower
Hotel in London.
For a full list of speakers, programme and
latest updates, go to our events website Please get
in touch for more information. 3

western europe

TDC snaps up Norwegian cableco Get for US$2.2bn,
Altice eyes Oi’s Portugal Telecom, and Tele Columbus has
second thoughts on IPO

Orange offers €3.4bn for Jazztel

Telco says deal would create Spain’s second-largest broadband player
French incumbent Orange has made a
€3.4bn (US$4.4bn) bid for Spanish fixedline operator Jazztel in an effort to bolster
its position in the highly-competitive
local market.
Orange is offering €13 per share in cash
for 100% of Jazztel shares, representing a
34% premium on the volume-weighted
average closing price over the 30 trading
days to 16 September.
The offer values Madrid-listed Jazztel at
8.6 times its projected 2015 EBITDA, taking
expected synergies into account, the Parisbased company said.
Orange, which owns Spain’s second-largest
mobile operator by clients, estimates the
combined entity will generate up to €1.3bn
in global synergies, largely due to savings
in operational expenditure and network
The offer is conditional upon at least
50.01% of Jazztel shareholders tendering
their shares.
Jazztel chairman Leopoldo Fernandez
Pujals has agreed to sell his 14.48% stake and
other company directors, including CEO
Jose Miguel Garcia Fernandez and general
secretary Jose Ortiz Martinez, will also take
part in the tender.
Some of Jazztel’s shareholders rejected the
offer, saying it undervalued the company.
Orange CEO Stephane Richard
subsequently stressed that his company
would not raise its offer, which he says is very
attractive and represents a 67% premium on
Jazztel’s market cap at the end of 2013.
To finance the acquisition, Orange has
issued about €3bn (US$3.8bn) worth of
hybrid bonds, split into three tranches.
The operator has priced €1.25bn
(US$1.6bn) of 5% notes at 98.9 to yield
5.125%, equivalent to 412.8 bps over midswaps. They have a seven-year first call date.
It has also priced a €1bn (US$1.28bn) 4%
bond at 99.253 to yield 4.125%, equivalent to
365.7 bps over mid-swaps, with a 12-year first
call date. Finally, Orange has priced £600m


The deal is scheduled to close in the first
half of 2015. Bank of America Merrill Lynch
reportedly advised Orange on the transaction.

Number two player

Orange CEO Stephane Richard
(US$980m) worth of 5.75% notes at 99.222
to yield 5.875%, equivalent to 342.6 bps
over mid-swaps. They have an 8.5-year first
call date.
All three bonds are perpetual. Orange said
investors have expressed a strong interest,
with total orders of over €11bn.
Lead managers on the offering, which was
rated Baa3 by Moody’s, were BBVA, Citigroup,
Morgan Stanley and Natixis.
“The bonds will be accounted as equity
under IFRS rules and will be granted a total
€1.5bn equity credit by rating agencies.
“The issue allows Orange to strengthen
its balance sheet at a cost of 4.5%, below
the average cost of its existing bonds,” the
operator said.
The French telco noted that, given
the strength of its balance sheet, Jazztel
acquisition offer was not conditional upon
obtaining financing.
However, it is subject to the approval of
relevant authorities, including the Spanish
Securities Commission (CNMV) and the UK
Takeover Panel. The latter will review the deal
as Jazztel has its registered office in the UK.
Richard was quoted on a conference call
with analysts as saying he expects the deal
to be subject to only a ‘phase I’ competition

Orange said the deal would create the
second-largest fixed-line broadband operator
in Spain, as well as a “dynamic” mobile player,
pushing customers towards convergent offers.
“In an economic context that has
continued to recover, this operation will
enable Orange to accelerate its growth in a
highly-competitive market.”
Spain’s largest mobile operators are
Telefonica’s Movistar and Vodafone.
TeliaSonera-controlled Yoigo is the fourth
player behind Orange.
IHS Technology senior analyst James
Allison noted that an Orange Spain-Jazztel
merger would create an operator with a 25%
share of the Spanish broadband market.
“The acquisition of Jazztel would add 2.2
million homes passed with fibre-to-the-home
technology,” he said in a note to investors,
adding that it would also give Orange an extra
1.5 million MVNO customers.
In Allison’s view, the offer is partly a
response to Vodafone’s recent expansion in
Spain with its acquisition of cableco Ono
for €7.2bn.
As a result of the offer, Jazztel will pull out
of talks with TeliaSonera to buy Yoigo. The
Spanish and Swedish telcos confirmed in
September that negotiations were underway.
However, during the call with analysts,
Richard was quoted saying that the company
does not need to acquire Yoigo and will focus
on combining its Spanish unit with Jazztel.
That said, Richard added that the company
supports consolidation in general and will
consider playing a role at a later stage if it is
able to.
For the past few months, Orange has
repeatedly said it was interested in playing an
active role in Spain via acquisitions. Orange
CEO delegate Gervais Pellissier discloses
more details about the Jazztel deal in an
exclusive interview on page 16-17.

western europe

Supermarket plans MVNO
The Austrian arm of German food retail giant
Aldi Sud is in talks with T-Mobile Austria
about launching an MVNO on its network, as
it looks to become a beneficiary of Hutchison
Whampoa’s takeover of Orange Austria.
Supermarket chain Hofer is aiming
to launch at the beginning of next year,
according to local media, and is reported to
be working with Ventocom, a prospective
virtual operator led by Orange Austria’s
former CEO Michael Krammer.

T-Mobile Austria told TelecomFinance
that Krammer struck a deal for Ventocom to
operate an MVNO, but would not comment
on whether it would be serving Hofer
customers. Hofer did not reply to a request
for comment.
In mid-September, T-Mobile’s CEO Andreas
Bierwirth said he expected a number of new
MVNOs to enter the market early next year.
Hutchison’s €1.3bn acquisition of Orange
reshaped Austria’s telecoms landscape,
reducing the number of operators in the
mobile market from four to three, and

In-depth review for
Telenet-De Vijver deal
The European Commission (EC) has
launched a Phase II investigation into
Belgian cableco Telenet’s proposed
acquisition of Flemish broadcaster De
Vijver Media.
In June, the Liberty Global subsidiary
agreed to buy 50% of De Vijver by indirectly
acquiring Finnish group Sanoma’s 33.3%
stake in the TV network for €26m and
injecting €32m into the business in
exchange for stock.
The EC is concerned that as Telenet
is Flanders’ leading cableco and
De Vijver owns two of the region’s most
popular Dutch-language free-to-air
TV channels, the transaction may lead
to competitors being cut out of the
Flemish market.
It is worried that the tie-up could
weaken Telenet’s competitors by either
making it more difficult for the buyer’s
rivals to get access to its cable platform,
and/or that access conditions for
De Vijver’s two channels may worsen. “Given

the importance of the Telenet platform
to reach end users in Flanders, such a
strategy of shutting out competitors may
negatively impact the ability of these
channels compete and to innovate,” the
Commission said in a statement.
The EU’s antitrust watchdog is worried
that if its fears are realised then consumers
could end up paying higher prices.
Liberty notified the Commission of the
transaction on 18 August and the regulator
said the deadline for its decision has been set
for 5 February 2015.
When the deal was announced in
June, Telenet said it would not be
consolidating De Vijver and that its
participation in the TV network would not
result in changes to the agreements it has
with other television providers.
The remaining 50% of De Vijver is
split between its CEO Wouter
Vandenhaute and his business partner
Erik Watte, who together own 25% through
their company W&W, and local media
group Corelio, which holds the final 25% of
the company.

was only allowed after substantial remedies
were agreed.
One of the commitments Hutchison
made was to offer up to 30% of its network
capacity to as many as 16 MVNOs over the
next 10 years.
In spite of the remedies, Austrian antitrust
regulator BWB said there has been significant
price increases in the country following
the deal.
In late August, it launched an investigation
into the price rises and requested information
from operators.

Alcatel closes
enterprise unit
Vendor Alcatel-Lucent has completed the
sale of a majority stake in its Alcatel-Lucent
Enterprise subsidiary to China Huaxin.
Alcatel, which will retain a 15% interest in the
unit, expects to receive cash proceeds of €202m
(US$255m) from the transaction.
The equipment company entered exclusive
talks with China Huaxin in early February, after
receiving a binding offer from the technology
investment company for the unit.
At the time, it was reported that Lazard was
advising Alcatel on the sale. The subsidiary,
which claims to have over 2,700 employees
worldwide and operations in more than 80
countries, will be headquartered in Colombes,
near Paris.
Alcatel said in a statement that the
divestment forms part of a strategic plan
launched in June 2013 to “refocus itself as a
specialist in IP, cloud and ultra-broadband
access, while realigning its balance sheet,
implementing cost savings of €1bn and
generating at least €1bn through selective asset
sales by the end of 2015”.
In August, the vendor revealed that it was
considering launching an IPO for part of its
submarine cables unit in the first half of 2015.

United Internet targets more buys

Fresh from its acquisition of German fibre operator Versatel in
September, ISP United Internet is eyeing more purchases as it
continues its efforts to consolidate Germany’s broadband market.
United Internet plans to expand its network and sees
further opportunities to buy smaller operators, its CEO
Ralph Dommermuth told a local publication without naming
specific telcos. At the start of September, United Internet

agreed to pay €586m (US$770.3m) for private equity firm
KKR’s 74.9% stake in Versatel and assume the telco’s €361m
(US$474.5m) debt.
The Versatel acquisition strengthened United Internet’s
position as Germany’s number two DSL provider, behind
Deutsche Telekom.
The ISP will be able to boast 4.12 million subscribers when the
deal closes, which is expected to happen during October subject
to antitrust approval. 5

western europe

Bouygues-SFR network deal to go ahead
France’s competition authority has rejected
incumbent Orange’s request to immediately
suspend a planned mobile network sharing deal
between two of its rivals, Bouygues Telecom
and SFR.
The regulator justified its decision by saying
the agreement did not pose a serious or
immediate threat to either Orange, consumers
or the sector.
Early this year, SFR and Bouygues agreed to
jointly operate 11,500 towers that would enable
them to cover 57% of France’s population. They
also have a temporary 4G roaming agreement

in place that runs until the end of 2016. In
May, the incumbent filed a complaint with the
authority, arguing that the agreement
was anticompetitive because it covers a large
area of the country. Orange also wanted the
deal to be suspended until SFR was actually
sold to local cableco Numericable, so the
impact on the French telecoms landscape
could be better assessed.
Conglomerate Vivendi agreed to sell SFR
to Altice and its Numericable unit earlier this
year. However, Orange is concerned that the
converged entity will compete directly with its
operations. Its CEO Stephane Richard said a few
months back that his company was planning

to also complain to the regulator about certain
aspects of the proposed merger.
Orange has said it will appeal the authority’s
decision on the Bouygues-SFR network
deal and stressed that only its request for an
immediate suspension has been rejected while
a decision regarding its complaint has not yet
been taken.
A spokesperson for the company added:
“We will be extremely vigilant as to the effects
on competition once SFR actually start using
Bouygues’ 4G network, and we reserve the
possibility of filing an additional request for the
immediate suspension of the contract based on
factual elements.”

Tele Columbus €300m
IPO in doubt

Cableco pauses for thought as German economy sags
German cableco Tele Columbus’plans to
raise at least €300m (US$378m) through an
IPO may be put on hold, following a slump in
European equity markets.
On 30 September, Tele Columbus
announced its intention to list before the end
of the year but, two weeks later, it released
another statement noting market uncertainty
and said it would continue to monitor the
Since the cable operator revealed its
plan to float, two German tech companies
– e-commerce group Rocket Internet and
online retailer Zalando – have experienced
disappointing IPOs.
German classifieds group Scout24, sold by
Deutsche Telekom to private equity last year,
was also planning to list on the Frankfurt
bourse before the end of the year. However,
reports suggest it has postponed that move
until 2015.
In contrast, local property company TLG
Immobilien is still set to push ahead with
its listing. In mid-October, the German
government slashed its economic growth
forecast for this year and next. It now projects
1.2% growth in 2014, down from its previous
estimate of 1.8%, and expects only 1.3%
growth rather than 2% for 2015.
The German economy, which could be
heading for a technical recession, has been
hit by the poor performance of its Eurozone
trading partners and the geopolitical crises
on the eastern border of Ukraine. Tele


Columbus’ possible IPO entails selling
existing equity and issuing new shares. The
company has not indicated how much of its
stock will be listed on the Frankfurt bourse or
whether some of its current investors will take
the opportunity to exit.
Germany’s third-largest cableco will use
the proceeds to cut its debt and is planning a
refinancing, which will reduce its leverage to
around 3.5x normalised LTM EBITDA.
Tele Columbus, owned by several hedge
and credit funds via a Luxembourg-based
holdco, mandated Goldman Sachs and JP
Morgan at the start of the summer to work on
a listing. BofA Merrill Lynch and Berenberg are
listed as joint bookrunners and Rothschild is
Tele Columbus’ financial adviser.
Tele Columbus’ management is bullish
about the company’s prospects. CEO Ronny
Verhelst said: “The significant growth
potential of Tele Columbus is based on one
of the best performing cable networks in
the German market and a very attractive
customer base with significant potential
for selling additional products and services
beyond cable TV services.”
British telco Vodafone acquired Tele
Columbus’ larger rival Kabel Deutschland
(KDG) for an enterprise value equivalent to
11.9x its EBITDA in 2013. Meanwhile, Liberty
Global’s recent acquisition of Ziggo valued it
at 11.3x EV/EBITDA, and Vodafone’s purchase
of Spanish cableco Ono equated to around
10.5x EV/EBITDA.
Tele Columbus is an integrated level 3/
level 4 operator and claims to have 1.7 million

connected households as of the end of June.
It offers cable television, broadband and
telephony, and recorded €207.7m in revenue
for 2013 and €89.6m EBITDA.
In 2013, KDG made an unsuccessful
attempt to acquire Tele Columbus,
meeting resistance from the German
antitrust regulator.

Chairman appointed

Meanwhile, the cableco has appointed a
chairman to its new supervisory board, ahead
of the IPO announcement and converted into
a stock corporation to facilitate the expansion
plan. Frank Donck, a former supervisory
board chairman of Belgian cableco Telenet,
leads the three-member supervisory board.
The other members are Carsten Boekhorst,
a partner with the UK’s Pamplona Capital
Management, and former Belgian prime
minister and OECD vice president Yves
Tele Columbus Holding, the operating
arm, is now known as Tele Columbus AG. In a
statement, the group stressed that the change
in legal form and name has no impact on its
operating business or registered office, which
will remain in Berlin.
Verhelst said the conversion into a stock
corporation “completes the structural and
organisational realignment we have been
implementing over the past years.
“The new legal form also gives us more
flexibility for additional growth and the future
development of Tele Columbus.”

western europe

Telefonica closes E-Plus deal


Rights issue

Spanish incumbent Telefonica has finalised its €8.6bn
(US$11.34bn) acquisition of German mobile operator E-Plus from
Dutch telco KPN.
As previously agreed, the Spanish group will retain a 62.1% stake
in its local unit Telefonica Deutschland, which now includes
100% of E-Plus, while KPN will hold a 20.5% interest in the
combined entity which is subject to a lock-up period of 180 days.
The remaining shares are publicly traded.
Telefonica said the deal enables it to become the largest mobile
player in Germany with around 41 million mobile accesses,
combined revenues of approximately €8bn and expected synergies
of €5bn.
The Spanish group also said it is now the second-largest
operator in Europe in terms of subscribers and revenues.
“Thanks to the conclusion of the acquisition of E-Plus, the
recent acquisition of GVT and the commercial revolution which
has transformed the Spanish market, Telefonica has gained a
leading position in three of its most important markets: Germany,
Brazil and Spain,” commented Telefonica.

At the end of August, the European Commission rubber-stamped
the deal after a lengthy regulatory review. To secure approval,
the companies agreed to guarantee local MVNOs access to their
networks in order to preserve competition.
To finance the €5bn cash consideration of the deal, Telefonica
Deutschland raised €3.6bn through a rights issue, selling over
1.11 billion shares at €3.24 each. Telefonica Deutschland gave
shareholders the right to buy one new share for each existing share
they already owned.
Citigroup, HSBC, Morgan Stanley and UBS were joint global
coordinators. BofA Merrill Lynch and JP Morgan acted as joint
bookrunners, while Santander, Bayerische Landesbank, BBVA,
BNP Paribas, Commerzbank, Mediobanca and Unicredit were
joint co-leads.
Meanwhile, its parent issued €1.5bn worth of convertible notes.
E-Plus CEO Thorsten Dirks will head the combined company.
Telefonica Deutschland CFO Rachel Empey and COO Markus Haas
will continue in their respective role on the management board of
the new entity.

Eircom rules out IPO

Incumbent Eircom has shelved plans for an
initial public offering that could have raised
as much as €1bn (US$1.3bn) after concluding
the strategic review it began in April.
In a statement, Eircom said there were
encouraging signs of positive momentum in
its business and its decision had the backing
of its key shareholders.
Eircom investors would prefer to
“continue participating in the upside from
the significant network investment made in
recent years, which has only recently begun
to manifest itself in the company’s operating
and financial results”, the operator said.
Reports have suggested Eircom’s
shareholders valued the business at €3bn
(US$3.9bn) and had hoped to raise €1bn, but
they could not convince potential investors
that their valuation was justified.
Alongside an IPO, Eircom’s advisers
– Goldman Sachs, Morgan Stanley and
Rothschild – were also sounding out potential
buyers. Operators Vodafone and Deutsche
Telekom, as well as private equity firms KKR,
Apax Partners and CVC were all reported to
have discussed potential deals, but none of
these talks resulted in an offer.
In late August, Eircom won the consent of
its shareholders, bondholders and lenders
for a corporate reorganisation, which would
have seen it incorporate in Jersey and be a tax
resident in Ireland. This would have
given Eircom greater flexibility to pay

Herb Hribar has
left Eircom

dividends to shareholders in the future
if it chose to list. It is yet to take up the
reorganisation option but could choose to if it
revisits an IPO further down the line.
A banker not involved in the talks told
TelecomFinance that Eircom’s investors may
look at an IPO again in a year or so, once the
company sees its results increase.

CEO leaves

Ten days after the strategic review ended,
the incumbent announced the departure
of its CEO.
Herb Hribar returned to the US after two
years with Eircom. The board appointed
CFO Richard Moat as acting CEO with
immediate effect.

Commenting on the CEO’s exit, Eircom’s
chairman, Padraig McManus, said: “He has
tirelessly dedicated himself to reshape the
company ... We now operate Ireland’s largest
fibre network and Eircom was the first to offer
4G mobile services in Ireland. All of this was
achieved while reducing our cost base and
improving our competitiveness.”
McManus continued by saying that the
“experience, knowledge and enthusiasm”
of Moat would keep the business on an
even keel.
An IPO this year would have come just
two years after the group was taken over by
its bondholders, which snapped it up from
an administration process. That takeover
saw US-based private equity firm Blackstone
become Eircom’s largest shareholder. 7

western europe

Altice targets
Portugal Telecom
Telco reportedly seeks to enter exclusive talks with Oi


Altice already has
a presence in the
Portuguese market
through telecoms
operator Oni and
cableco Cabovisao

Luxembourg-based telecoms holding
Altice is negotiating the acquisition of Oi’s
Portugal Telecom (PT) and has hired
Goldman Sachs and Morgan Stanley to advise
it on a bid, TelecomFinance has learnt.
Owned by billionaire Patrick Drahi, Altice
already has a presence in the Portuguese
market through telecoms operator Oni,
which it acquired in June 2013, and cableco
Cabovisao, which it bought in February 2012.
Local media reports have also named
UK-based Vodafone Group and Spanish
Telefonica among the potential bidders.
But Altice is reportedly looking to enter
into exclusive talks with Oi over PT and
the holding is rumoured to have contacted
the group’s Brazilian and Portuguese
shareholders to discuss issues including price
and proposed deal structures.
In a statement on 13 October, the
Brazilian telco Oi said that there were
various parties, including Altice, that
have expressed an interest in the company’s
Portuguese operations.
The telco noted the potential bidders have
contacted its adviser, BTG Banco Pactual, to
request information about PT to potentially
acquire the target or part of its non-strategic
assets. In an earlier securities filing, Oi had
responded to market speculation saying
that it had not taken any decision regarding
the sale of PT, which it agreed to acquire in
October 2013, and had not received an offer
for the asset.
It, however, added it was still continuing
with its strategy to dispose of non-core assets
including Africatel, for which it had not
received a bid either.
Oi’s interim CEO Bayard Gontijo later
added that Oi was not looking to unravel its
merger with PT, although it could sell some
Portuguese assets.
Deal talks between Altice and PT would
need to establish how much debt the
Portuguese company would retain. In early
September, Oi and PT revised the terms of
their merger, following Rioforte’s default on

Altice’s owner Patrick Drahi
a €847m (US$1.1bn) debt payment to the
Portuguese operator which forced it to reduce
its stake in the combined entity from 37.4%
to 25.6%.
Oi’s CFO Gontijo was named interim CEO
in early October, following the resignation
of Zeinal Bava.
Bava, who was appointed as head of the
Brazil-based combined Oi-PT business
in June 2013, has been instrumental in
facilitating the merger, further fuelling
speculation that the combination could be
undone in the wake of his departure.
Rumours of Altice’s interest in PT first
emerged in early August when CEO Dexter

Goei said the company would continue to
monitor the situation in Portugal.
“There continues to be several steps that
this can play out, particularly as the Brazilian
consolidation play is just starting to get
rolling,” he noted.
Altice is currently seeking regulatory
approval for the merger between its French
cableco Numericable and local mobile
operator SFR, which it agreed to acquire from
Vivendi in April.
Besides Portugal and France, Altice
owns a portfolio of telecoms assets in
Belgium, French overseas territories, Israel,
Luxembourg and Switzerland.

western europe

TI CEO mandated
for Metroweb deal

Telecom Italia CEO Marco Patuano

The CEO of Telecom Italia (TI), Marco Patuano,
has reportedly received a mandate from the
management board to negotiate the acquisition of
infrastructure fund F2i’s stake in local dark fibre
operator Metroweb.
Patuano was given the mandate at the last board
meeting on 26 September, according to a newswire
report citing a source close to the matter.
However, two of Metroweb’s shareholders –
Fastweb and government-owned lender Cassa
Depositi e Prestiti (CDP) – were reported as saying
they were not aware of any plans to sell F2i’s stake
to TI.
In March, media reports had already suggested
that the Italian incumbent was planning to invest
€300m for a less than 50% stake in Metroweb to
avoid antitrust scrutiny. TI was reportedly looking
to buy the stake from F2i, which holds an indirect
46.8% interest in the fibre optic provider.
Most of the remaining shares are split between
CDP, with an indirect 32.2% stake through Fondo
Strategico Italiano (FSI), and Fastweb which
holds 10.6%.
In September, CDP CEO Giovanni Gorno
Tempini reportedly said Metroweb had the financial
resources to invest in fibre projects and was
welcoming approaches from potential partners.
A deal with Metroweb would make strategic
sense for TI, as the company is striving to reduce
its more than €28bn net debt to upgrade its
broadband network.
In 2011, F2i and Intesa San Paolo bank fully
acquired Metroweb from UK investment fund
Stirling Square Capital Partners and multi-utility
company A2A for €436m.

Fastweb sale rumours return


Speculation over the future of Italian triple-play operator Fastweb
has reignited following a report which suggests that its parent,
Swisscom, has hired a bank to explore a sale of the unit.
The Swiss incumbent is working with UBS, previously an adviser
to long-term Fastweb suitor Vodafone, to see if a deal can be done
with the British telco, sources familiar with the situation told a
newswire in early October.
Vodafone is reportedly not currently in talks with Swisscom but
retains an interest in acquiring the Italian telco.
Fastweb CEO Alberto Calcagno was later quoted as saying that
the sale rumours were “mere gossip”, while Aldo Bisio, the head
of Vodafone Italy reportedly said that present conditions were
not favourable for a deal to buy the Italian broadband company.
Italy is Vodafone’s largest European market where it is yet to offer
fixed-line services and has therefore been linked to a Fastweb
acquisition since it decided to focus on adding fixed-line assets to
its mobile operations.

Swisscom, which is majority-owned by the Swiss Confederation,
acquired Fastweb in 2007 for an enterprise value in the region
of €4.2bn. The business could now be worth as much as €5bn,
according to the report.Fastweb has the second-largest network
in Italy after Telecom Italia. The Italian incumbent has itself
been linked to an acquisition of smaller local B2B fibre operator
Metroweb, in which Fastweb has a 10% stake (see story above).
However, the asset is not of interest to Vodafone as it would not
amount to a game-changing acquisition, the report said citing
one of the people. Vodafone has acquired a number of fixed-line
operators over recent years in the larger European markets it
operates in: in 2012, it bought British enterprise player Cable &
Wireless Worldwide for US$1.67bn; in 2013 it sealed its US$10.5bn
takeover of Kabel Deutschland; and this year it bought Spanish
cableco Ono for US$10bn.
Vodafone has also hinted at a “transformational” M&A deal in
the longer term. In September, its CEO Vittorio Colao was cited as
saying his company could explore a purchase of pan-European
cable giant Liberty Global for the right price (see story on page 15). 9

western europe

Vivendi eyes Mediaset Premium stake
French media group Vivendi is reportedly looking to acquire
a stake in Italy-based Mediaset’s pay-TV unit from Spain’s
Telefonica to expand its footprint in the country.
The company is interested in buying 11% of Mediaset
Premium, according to a newswire report.
As part of a deal agreed in September to sell its Brazilian
broadband business GVT to Telefonica, Vivendi will receive
a 5.7% stake in Telecom Italia (TI) which represents 8.3%
of the Italian incumbent’s voting capital.
Such a stake could reportedly help it forge alliances
to distribute its content more widely in Italy.


Quad-play operator Nos, which was
created from the merger of Zon and
Optimus, has sealed a €175m (US$225m)
bond issued to refinance existing debt.
BNP Paribas, ING and Societe Generale
acted as mandated lead arrangers and
bookrunners for the six-year private
offering. Caixabank was lead arranger.
The notes mature in September 2020.
They carry a floating interest rate with a
spread of 215 bps, and the first coupon
will be due in March 2015.
The new facility will replace an existing
€100m bond originally placed by Zon and
Optimus’ parent Sonaecom in September
2011. It was arranged at the time by BNP
Paribas, WestLB and ING and was due to
mature in March 2015.
The 2020 notes will also refinance a
€25m bond issued in November 2010 in
a private placement led by Banco BPI,
Banco Santander Totta and BNP Paribas.
Nos said the refinancing enables it to
further diversify sources of debt, while
increasing the average maturity of its net
financial debt to 2.5 years and further
reducing the all-in average cost of debt.
Cableco Zon and wireless operator
Optimus agreed to merge in January
last year to create Portugal’s secondbiggest telco behind incumbent
Portugal Telecom.
After a lengthy antitrust review,
the combination received regulatory
approval and the deal completed in
late August 2013.


EC green-lights
Liberty-Ziggo deal

Liberty Global’s takeover of Dutch
cableco Ziggo has been cleared by the
European Commission following a Phase II
To obtain approval for the acquisition, the
pan-European cable giant offered remedies
to address certain competition concerns,
including the divestment of its Film1
business in the Netherlands.
Liberty Global also pledged to terminate
clauses currently in carriage agreements
with TV broadcasters that restrict the ability
of broadcasters to offer their channels and
their content through OTT services, and
committed not to end those agreements
for eight years.
Furthermore, in order to ensure that
commitment cannot be undermined, Liberty
Global has committed to maintain adequate
interconnection capacity through at least
three un-congested routes into its internet
network in the country, at least one of which
with a large transit provider.
Joaquin Almunia, the Commission’s vice
president in charge of competition policy,
commented: “The commitments offered by
Liberty Global ensure that the acquisition
of Ziggo will not be detrimental to Dutch
consumers, who will continue to enjoy the
benefits of innovative services and choice for
watching audio visual content.”
Mike Fries, CEO of Liberty Global, said:
“We are excited to create a national cable
champion, and look forward to restarting our
share buyback programme very soon.”
Liberty Global was forced to prolong its

public offer for Ziggo shares to 4 November
when the European Commission extended
its review of the purchase.
Liberty struck a deal to buy the Dutch
cableco for €4.9bn (US$6.6bn) earlier this
year and merge it with its own local cable
assets, UPC Netherlands.
In June Liberty launched its €35.74 per
share offer, a 47% premium over Ziggo’s
closing share price on 27 March. The
antitrust authority had set a provisional
deadline of 3 November to finish its review of
the transaction.
The tie-up brings together the
Netherlands’ two largest cable operators,
although the company’s footprints do not

The commitments
offered by Liberty
Global ensure
the acquisition of
Ziggo will not be
detrimental to Dutch
consumers, who will
continue to enjoy the
benefits of innovative
services and choice
for watching audio
visual content

Nos issues

Telefonica might be keen to sell its Mediaset Premium
stake, which it acquired in July for approximately €100m,
as it is looking to fully exit Italy, an analyst was quoted
as saying.
Telefonica reportedly has the right to sell back the interest
within six months from acquiring it, if the Italian media group
finds another partner for the business.
Should a deal with Mediaset go through, Vivendi would be
going back to a familiar market.
In 1997, Vivendi-owned Canal+ bought Italian pay-TV provider
Telepiu. It was then merged with News Corp’s pay-TV division
Stream in 2001 and sold to News Corp a year later, in a bid to
reduce the parent’s debt.

western europe

Tele2 strikes sharing deal with Ice


Norway’s third largest carrier Tele2 has inked
an agreement with Ice Communication,
owned by new entrant Access Industries, to
gain access to part of its 900 MHz spectrum
until April 2015.
Under the deal, Ice will be able to buy parts
of Tele2’s mobile network infrastructure if the
country’s competition authority approves the
sale of Tele2 to larger rival TeliaSonera.
The companies did not disclose the financial
terms of the agreement.
TeliaSonera, which is Norway’s second largest
player, agreed to buy Tele2 in July for SKr5.1bn
(US$744m) after the target lost out in last
December’s 4G auction.
In early September, the competition
authority set an 11 November deadline to
assess whether the merger would result in

reduced competition and harm consumers.
Regulatory concerns over the deal, which
would combine two of the country’s three
established mobile operators, prompted the
Norwegian Post and Telecoms Authority (NPT)
to scrap the January 2015 date it had set to
auction 1,800 MHz spectrum.
The infrastructure deal will enable Ice,
a subsidiary of American billionaire Len
Blavatnik’s Access Industries, to expand its
network coverage, thus potentially becoming a
viable third player.
“This [agreement] has a very positive impact
on competition in the Norwegian market,” said
TeliaSonera Norway CEO August Baumann in
a statement.
“It helps to meet the political target
according to which there should be three
mobile networks in the country, while it
also guarantees network access to Tele2’s

customers until spring 2015, when the
traffic will be switched over to our network,”
he added.
TeliaSonera, which committed itself to 98%
population coverage for 4G by the end of 2016
if the merger with Tele2 goes ahead, said it has
not taken part in the negotiations between Ice
and Tele2.
Buying Tele2 Norway would boost the
company’s market share from 23% to around
40% with 2.7 million subscribers, although it
would still lag behind the country’s incumbent,
Telenor, which has 3.2 million customers.
In December 2013, Norway secured
NKr1.79bn (US$291m) by selling frequencies to
TeliaSonera, Telenor and Ice.
After failing to secure spectrum, Tele2
hired ABG Sundal Collier in March to identify
strategic options to stay competitive in the
Norwegian market.

TDC buys Get for US$2.2bn
Danish telco snaps up cableco from private investors
Denmark’s telco TDC has agreed to acquire
Norway’s second-largest cableco Get from
its private equity owners for NKr13.8bn
(US$2.16bn), in a deal it says will create
Scandinavia’s largest cable TV company
in terms of revenue.
TDC will finance the purchase from
Goldman Sachs’ GS Capital Partners
and Quadrangle Capital Partners by
issuing debt.
The Copenhagen-based operator will
simultaneously adjust its dividend payout
ratio to about 60% of its equity free cash
flow. This reduces the dividend payout for
2014 to DKr2.50 per share from a previouslyanticipated DKr3.70 per share.
In early September, it was reported that
bankers were working on debt financing
packages for potential buyers of around €1bn
(US$1.3bn), with senior leveraged loans,
second lien loans and high-yield bonds all
considered as options.
JP Morgan acted as TDC’s financial adviser
on the transaction, while Kromann Reumert
was its legal adviser. The Danish telco expects
the deal, which is subject to the approval of
Norwegian competition authorities, to close
in Q4 this year.
Get’s owners hired Goldman Sachs and
Deutsche Bank in May to examine an IPO,
but later opted for a sale process. The
acquisition will see TDC’s cable business
increase from 1.2 million to 1.7 million

TDC CEO Carsten Dilling
connected households and produce revenues
of DKr7bn (US$1.2bn).
TDC CEO Carsten Dilling described the
deal as the company’s most significant
investment in many years, saying it

marks its transformation into a leading
Scandinavian provider of TV, home
entertainment and high-speed broadband
services using the cable platform.
“It is also a strategic move into the
consumer market in Norway within an
industry we know very well from having
run our YouSee cable business in Denmark
successfully for years.”
Dilling added that TDC Norway, which
owns a fibre-based transmission network
and focuses on large business customers,
and Get, which targets individuals and
small and medium-sized businesses, are
a good match from both a commercial
and a technical perspective.
Get’s current CEO Gunnar Evensen, who
has held the post since 2000, will lead the
combined organisation in Norway.
Get had a turnover of NKr2.4bn
(US$374.8m) in 2013 and EBITDA of
NKr1.1bn (US$171.79m), TDC said. It owns
and operates a hybrid fibre and coax network
in urban areas, passing about 700,000
households and businesses, 500,000 of which
are connected customers.
GS Capital Partners and Quadrangle
bought Get for €725m in 2007. In 2012, they
considered putting the business up for sale
and a €1bn-plus price tag was mooted.
They later decided to reorganise Get’s
debt and hold on to the cableco.
Telenor is the largest supplier of mobile
services, pay-TV and fixed broadband
in Norway. 11

western europe

4G auction
raises €381m

Telefonica prices €800m

Greece’s telecoms regulator EETT has
said local operators paid a total of €381m
(US$482m) for spectrum licences in the
auction of 800 MHz and 2.6 GHz frequencies.
Incumbent Cosmote, British-backed
Vodafone Greece and Wind Hellas
acquired all the available 15-year licences.
Cosmote spent €135m on two paired blocks
in the 800 MHz band, six paired blocks in the
2.6 GHz band, and a further two single blocks
in the 2.6 GHz. Vodafone bought the same
spread of licences for €124.5m. Meanwhile,
Wind purchased two paired blocks of 800
MHz spectrum and four paired blocks in the
2.6 GHz band for €122m. EETT started on
working on the digital dividend auction back
in May 2013 following a renewed bailout plan
with the European Union and International
Monetary Fund, which prescribed a
switchover from analogue to digital TV to
free up airwaves.
The recession-hit country’s telecoms
market is moving closer toward consolidation,
which local analysts say the sector dearly
needs. Vodafone and Wind held talks about a
merger in 2012, but Vodafone pulled out of the
process. However, analysts believe a deal may
still happen in the future as the companies
have become closer since 2012.



EuNetworks inks
€70m funding

Pan-European fibre operator EuNetworks
has secured new debt to develop its network
and repay existing debt.
The bandwidth infrastructure provider has
entered into a €70m (US$88m) multi-currency
credit facility with Barclays and RBC Capital
Markets, and the loan can be expanded to
€100m (US$126m) if growth opportunities
present themselves.
EuNetworks did not disclose the terms of
the loan beyond saying it was happy with the
interest rate, total leverage incurrence test,
and the delayed draw feature.
Brady Rafuse, CEO of EuNetworks, said:
“This funding enables us to further meet the
growing bandwidth needs of existing and
new customers across Europe.”
Some of proceeds of the new loan will
be used to completely repay existing debt
facilities that were entered into in May 2013.
EuNetworks operates fibre and data centres
across Europe and is headquartered in
London, although the business has been listed
on the Singapore Stock Exchange since 2004
and is registered on the island.


Incumbent Telefonica has priced a €800m
(US$1.01bn) bond at par.
Launched under the Madrid-based
company’s EMTN programme, the notes
carry a coupon of 2.932%, have a reoffer
price of 100% and mature in October 2029.
Lead managers for the issue were BBVA,
Credit Agricole, Caixabank, Mitsubishi UFJ,
RBS and Santander.
Moody’s rated the bond Baaa2, while
Standard & Poor’s and Fitch gave a BBB. In

mid-September, Telefonica issued €1.5bn
worth of convertible notes to help finance
its €8.6bn takeover of German mobile
operator E-Plus.
Also in September, Telefonica agreed a
€7.24bn cash-and-stock deal to purchase
Vivendi’s Brazilian broadband unit GVT.
The telco will fund the cash component
of the deal with a capital increase at its
Brazilian mobile unit Vivo.
It will subscribe to this to keep its current
74% stake, funding this, in turn, with a
capital increase at group level.

Former Telstra
CEO mulls TI offer

Sol Trujillo, the former CEO of Australian
telco Telstra, is reportedly looking to raise
€7.5bn (US$9.6bn) to acquire a stake in Italian
incumbent Telecom Italia(TI).
Trujillo, who has not yet approached TI,
has discussed the potential bid with financial
advisers, according to a Bloomberg report,
which cites people familiar with the matter.
A number of Qatar and Abu Dhabi-based
sovereign wealth funds have reportedly shown
interest in the project.
A €7.5bn offer would represent just under
half of the incumbent’s market capitalisation,
which currently stands at €17.55bn.
Senior Italian officials, including junior
minister for economic development Antonello
Giacomelli, reportedly held confidential
meetings over the project.
A later, separate, report quoted Giacomelli
as saying he was not aware of Trujillo’s plans,
adding that the Italian government would
use its special powers to defend the company
if required.
Trujillo started his career at AT&T in 1984.
He was later appointed CEO of US West and
also headed French incumbent Orange for
a year. In 2005, he became CEO of Melbournebased Telstra.
TI is trying to offload some of its assets to
reduce its net debt, which stood at €28.8bn, as
of 30 June 2014.
In recent years, TI has attracted interest
from a number of overseas investors,
including Hong Kong billionaire Li Ka-shing,
AT&T, Carlos Slim’s America Movil and

Egyptian tycoon Naguib Sawiris, who saw its
US$3.8bn offer to buy a stake in TI rejected
in 2012.
Sawiris was recently quoted as saying that
he would invest in TI as long as the company
kept its stake in Brazilian mobile operator TIM
Brasil. He reportedly added that he would be
willing to take part in a capital increase but
would not buy shares on the market.
However, during an event in Capri in early
October, TI CEO Marco Patuano reportedly
said the company was not studying any
capital increase, including issues dedicated to
new investors.

No tower sale in 2014

Patuano also pointed out that the company
will not close the sale of its tower portfolio
by the end of this year, as initially expected,
adding that it was currently evaluating
two options.
At the end of July, local media reports
suggested that TI was looking to launch the
sale process for its 8,000 mobile telecoms
towers in September.
Earlier reports had said that instead of
selling the towers outright, TI management
was looking to spin off the tower assets, worth
an estimated €1bn (US$1.34bn), before listing
them on the stock exchange.
Italian towerco EI Towers and infrastructure
fund F2i as well as Spain’s Abertis and
American Tower have been reported as
potential bidders.
Proceeds from the tower sale are expected
to be used to upgrade its domestic networks.

western europe

Sunrise sale talks played down

Rumours of a sale of Sunrise have resurfaced after a report
suggested the Swiss mobile operator’s private equity owner
CVC Capital Partners had resumed the exit process it suspended
at the end of 2013.
However, a source close to the situation played down the
newswire report and implied that the suggestion of a
specific process was incorrect, although the operator would
be sold eventually.
CVC bought Sunrise in 2010 from Danish telco TDC for
US$3.2bn and a potential sale price for the business of US$5.2bn
has been estimated by the media, based on the 8x EBITDA

multiple its larger rival Swisscom trades at. In its most recent
results, Sunrise reported US$1bn in revenue for the first half of
the year and recorded EBITDA of US$168m for Q2, which the telco
said was a 5.7% increase on the same period in 2013.
Sunrise is the second-largest mobile operator in Switzerland.
Earlier this year, it was linked to a merger with rival Orange,
which would take the country’s mobile market down from three
operators to two.
A Swiss publication reported that a tie-up could be possible
because the market environment had improved since cableco UPC
Cablecom launched an MVNO earlier this year.
Sunrise is headquartered in Zurich and also offers fixed-line
telephone, broadband and digital TV services.

Visa considers
exit from

A Phones 4u store in the UK remained closed after the company went into administration

Phones 4u goes bust

Phones 4u’s administrator PwC has
agreed to sell almost 200 of the stricken
reseller’s shops to network operators EE and
Vodafone for about £15m (US$25m).
Phones 4u went into administration on 15
September after EE and Vodafone decided not
to renew their contracts with the company.
EE will buy 58 stores for approximately
£2.5m while Vodafone will acquire 140 Phones
4u outlets for £12.4m.
Both deals are subject to the approval
of the UK courts, and the administrator
said it hopes both disposals can be ratified
in one hearing. The remaining 350
standalone stores will be closed. A group
of investors, which hold some of

Phones 4u’s £430m (US$702m) senior secured
notes, had proposed to take a substantial
write-down on their debt to reorganise
Phones 4u so that it can meet the lower
commercial terms EE and Vodafone
had proposed.
PwC subsequently dashed bondholders’
hopes for a debt-for-equity swap, saying it
was not viable.
Phones 4u’s private equity-owner
BC Partners has already recouped its
investment in the retailer. In September
2013, Phones 4u issued £200m (US$327m)
PIK toggle notes to pay BC Partners a one-off
dividend, which was topped up with a further
£25m in cash. This paid off all of BC Partners’
initial equity used to buy Phones 4u and the
firm has made a 30% profit on its investment.

US-based payments technology giant Visa
has hired JP Morgan to review options for its
5.5% stake in UK mobile payment provider
Visa, which in 2009 secured a 14.4% interest
in Monitise, has over time reduced its stake in
the company.
The move is consistent with its strategy to
seed emerging players before tapering that
influence as the partner company grows, Visa
said in a statement.
“Consistent with Visa’s increased
investment in our in-house capabilities,
and the substantial growth in Monitise, Visa
is considering its options with regard to its
Monitise stake,” commented Visa EVP of
corporate strategy Bill Sheedy.
Shortly after the announcement, shares
in Monitise fell about 30% to £0.29. As
TelecomFinance went to press, Monetise had
a market cap of £584m.
According to Mark Palmer from BTIG
Research, the evaporation of about a quarter
of Monitise’s market capitalisation was out
of proportion to its likely impact on the
company’s prospects, “including its likelihood
to eventually be taken over at a significantly
higher share price by IBM or another suitor
seeking to enhance its role in the global
mobile money space”.
Visa and Monitise also inked a commercial
agreement in 2009, which runs until 2016, for
the provision of mobile platform development
In a statement, Monitise said it will
continue its alliance with Visa and “reiterates
it guidance for this financial year, its
expectation to be EBITDA profitable in FY
2016 and its longer-term guidance for 2018”. 13

western europe

Liberty completes All3Media deal
John Malone’s Europe-focused cable
giant Liberty Global and US media and
entertainment company Discovery
Communications have completed
their joint acquisition of UK-based
TV production and distribution house
Liberty and Discovery agreed in May
to create a 50:50 joint venture to buy
All3Media from its founders and the
Permira funds.
The deal, which has obtained
regulatory clearance, values All3Media
at about £550m (US$930m).
Commenting on the closure in a
statement, Liberty CEO Mike Fries
described All3Media, which produces
content for some of its biggest markets
in Europe, including the UK, Germany
and the Netherlands, as a natural fit for
the company and its content strategy.

Daisy offer
deadline pushed
back again


AIM-listed Daisy Group has again extended
the deadline for a consortium fronted by its
CEO, Matthew Riley, to buy it out.
Riley, asset manager Toscafund and
private equity firm Penta now have until 20
October to formalise their £1.90 (US$3.11)
per share offerto acquire the UK telecoms
and internet provider.
The consortium asked for the latest
extension to “consider and finalise certain
aspects of its proposal”.
The buyers made a preliminary approach
in late July that valued Daisy at £507m
(US$817m). Under UK takeover law, the
syndicate initially had until 10 September
to make a binding offer but extended the
deadline to 22 September, and then to 6
Riley, who has led Daisy since founding it
in 1991, already has a stake of roughly 23%,
while Toscafund holds about 28.5%.
Penta sold its UK B2B telco SpiriTel to
Daisy back in 2010 for £27m (US$45m).
Liberum is Daisy’s nominated adviser,
and is also advising on the UK takeover
code. Oakley Capital is its financial adviser.
Toscafund listed JP Morgan for enquiries.
Daisy’s shares are currently trading
at £1.83 and the telco has a market
capitalisation of £489m.


All3Media comprises 19 production and
distribution companies from across the
UK, Europe, New Zealand and US.
In May, the company was recapitalised
with what Liberty and Discovery have
described as “a structure that provides
for a solid financial foundation as the
joint venture takes control and All3
Media enters the next phase of growth”.
JP Morgan acted as financial adviser to
Liberty and Discovery on the deal.
The acquisition forms part of Liberty’s
expansion into European TV markets,
which has also seen it acquire the
UK’s Virgin Media and UK commercial
broadcaster ITV.
Meanwhile, All3Media CEO Farah
Ramzan Golant has stepped down
from the role.
A global search for a successor has
begun. COO Jane Turton has been
promoted to managing director and will
lead All3Media in the transition period.

Liberty Global chairman John Malone

MVNO TPO plans
London listing
UK-based MVNO The People’s Operator
(TPO) is looking to launch an IPO on London’s
junior market AIM in November.
Proceeds from the offering will be used
to grow its online community to gain more
customers, as well as build the infrastructure
required to expand into identified target
countries, particularly the US, according to a
securities filing.
TPO, which is being advised by FinnCap,
declined to disclose the exact size of the
offering or the pricing, although it confirmed
that it would sell a minority stake.
The London-based company, which is
backed by Wikipedia founder Jimmy Wales,
donates 10% of each user’s bill to a charity
of their choosing. Additionally, 25% of
TPO’s profits go to charity through the TPO
The company claims that its business
model is still profitable as it relies less on
traditional customer acquisition models,
compared to other market players. Instead,
it looks to secure new customers through a
viral marketing system based on an online

global community, to be developed by Wales
who was appointed as TPO vice chairman in
January and also serves as director of strategy
and digital community.
Founded in November 2012, the Londonbased MVNO, which is reportedly valued
at about £100m, has more than 10,000 UK
subscribers and provides services using
EE’s network.
Commenting on the IPO announcement,
TPO chairman Andrew Rosenfeld said: “Our
operating deal with Sprint Corporation along
with Jimmy’s plans for viral online growth
will, I believe, have a dramatic impact on
revenues and thereby deliver significant
returns to shareholders.”
TPO has recently signed an operating
agreement with US operator Sprint Corp
and aims to launch in the country 2015.
According to the filing, the MVNO
“intends to operate only in those countries
that offer competitive wholesale mobile
network prices”.
In January, Wales said the company
would be looking to ink MVNO deals and
was seeking partners and investors across
the globe.

western europe

Gigaclear gears up for IPO
British rural broadband provider Gigaclear
is set to list on AIM, London’s junior stock
market, to expand its network coverage
across the country.
The company said new ordinary shares
will be placed with institutional investors. It
also plans to invite qualifying customers and
existing shareholders to invest in the shares.
Dealings in the shares are expected to

start in October. The company has not
revealed how much it plans to raise from the
listing, but according to a local report citing
people familiar with the plans, Gigaclear is
targeting about £20m (US$32.5m).
In the medium term, the operator plans to
invest £180m, including the IPO proceeds, to
build networks serving up to 200,000 homes
in underserved areas across the UK.
Oriel Securities is acting as nominated
adviser and the company’s sole broker for

the IPO while Cameron Barney serves as
financial adviser.
Oriel declined to disclose the size of the
stake that will be floated and dismissed any
possibilities of growing via M&A.
Founded in 2010 by Matthew Hare,
the company’s current CEO, Gigaclear
operates nine fibre-to-the-premises
networks in rural areas.
Another five are under construction and
are due to be completed by Q4 2014.

CEO: Vodafone may
look at Liberty bid

Vodafone could consider a
“transformational” M&A deal in the longer
term and would explore a takeover of cable
giant Liberty Global for the right price, CEO
Vittorio Colao has been cited as saying.
Speaking at a September investor
conference in New York, Colao, pictured,
reportedly said efforts to invest in Vodafone’s
networks and consolidation within the
telecoms sector would better enable the
company to make deals in the longer term.
Following his presentation, the CEO was
reported to have said that John Malone’s
Europe-focused cableco may be the “right fit”
for Vodafone, price dependant.
UK-based Vodafone has made a strategic
decision to look for convergence plays in
European markets where it already offers
mobile services. The sale of its stake in the US’
Verizon Wireless for US$130bn last year has
freed up
cash to both develop its networks and
make acquisitions.
Vodafone has since acquired Germany’s
largest cableco Kabel Deutschland for €7.7bn,
beating Liberty to the asset, as well as Spanish
cableco Ono for €7.2bn and Greek broadband
and fixed-line operator Hellas Online for
€72.7m. And this July, the company made
a joint bid with Greek telco Wind Hellas for
Athens-listed alternative fixed-line operator
Meanwhile, there has been considerable
speculation that Vodafone could combine
with a large player such as Liberty, with which
it has competed for cable assets in Europe, or
US telecoms giant AT&T.

Vodafone CEO Vittorio Colao
An industry banker, however, commented
that Vodafone may be unwilling to be bought
by AT&T. Acquiring Liberty would allow
Vodafone to become a very large group,
therefore deterring AT&T from making a move
for the British telco.
Separately, Colao was quoted as saying
at the Goldman Sachs Communacopia
conference in September that UK rival BT
is expected to pursue a similar strategy to
BT may also discount mobile services
to help push its core broadband offerings.
Colao reportedly contended that such a move

would likely prompt Vodafone and other
local mobile operators to discount their fixed
broadband services.
Colao added he is optimistic that the
new European Commissioners will
address the low return on investments in
the telecoms sector, arguing that mergers
should be approved without remedies
granting other operators wholesale access
to networks.
Gunther Oettinger and Andrus Ansip
were named as the successors to Neelie Kroes
in September as commissioners for the
digital agenda. 15


“We need the positive impact
of consolidation in France to
aid market repair”

In September, Orange CEO delegate Gervais Pellissier also became the company’s
head of European operations (excluding France). A few weeks later, the French
incumbent made an offer for Spanish fixed-line operator Jazztel. In his first interview
since taking on his new responsibilities, Pellissier talks to TelecomFinance about
convergence, consolidation and the prospects of taking EE public

GF: What about the three cable operators
in the north of Spain – are they of any
interest to you?
GP: I think to us or to Vodafone they are quite
small but my feeling is that because these
are cable operators, Vodafone is the more
natural acquirer.
In terms of technology, our basic
technology is DSL and FTTH and we just
rent cable lines from Vodafone.
We won’t manage a cable network so I am
not sure we will look at the cable guys in the
north of Spain.
We might look at the potential because we
have a long-term relationship with the Basque
one, Euskaltel, but I’m not sure it is of great
interest for Orange Spain.
GF: Moving on to mobile, do you think Yoigo
is an attractive asset?
GP: Yoigo is an asset which has customers,
spectrum, and some infrastructure. Now,
how attractive is that for others? I think
spectrum and customers are always attractive
to anybody, but let’s be clear, everybody has


Guy Ferneyhough

Senior Reporter,

Source: François Maréchal for Orange

Guy Ferneyhough: Can you walk us through
the Jazztel acquisition and what you see will
be the benefits of owning the Spanish fixedline operator?
Gervais Pellissier: We think the European
market is clearly now in a phase of in-country
consolidation, in two dimensions. One is the
reduction of the number of mobile players,
like what we’ve seen in Ireland, Germany,
and maybe in France.
And the other trigger is convergence
between fixed and mobile players, or
consolidation amongst fixed players. In Spain,
it is not mobile consolidation today: it is
fixed-to-mobile, or the reinforcement of fixed
operators, as is the case for Orange, which
was already slightly bigger than Jazztel in the
fixed business.

enough infrastructure. Today the question is
even if Yoigo is attractive, what is the price of
that attraction?
If we succeed in acquiring Jazztel, the
view on the pricing of Yoigo might be
slightly different because Yoigo has no fixed
infrastructure and depends on Telefonica to
penetrate the fixed market.
GF: And as far as four-to-three consolidation
in Spain goes, would you anticipate that
being an issue?
GP: We think that today it might not be such
a big issue, although that is a little more

complex on the regulatory basis than fixedmobile consolidation.
Curiously, there is always more debate
by regulators on mobile consolidation and
MVNOs, whereas there is too little debate
on cable. We think there is too much focus
on mobile today and maybe not enough
on cable.
GF: What is your view on Telefonica’s deal
with Canal+ in Spain?
GP: The deal is done. It has to be approved
by the regulator, but we have nothing against
that deal. We think the question for other
fixed operators – especially when they are
alternative – is to ensure that they have equal
access to the content.
This is what I think both Vodafone and
ourselves will try to secure with the regulators
so that Telefonica is not creating exclusive
bundles that cannot be replicated by others.
But we have nothing against the fact that
Telefonica can make money in content and
manage content operations
In France, when we decided to invest
into content, we were forbidden by the
antitrust regulator to dedicate our content
exclusively to our customers – we had to
open it up.
We think that in terms of financial flow, it
should remain at arm’s length, and not create
a pricing differentiation
If you take France again, one of the claims
we have against the merger between SFR and
Numericable is the inequality of access to
content given to Numericable compared to
fibre or DSL players.
Numericable has a specific regime to access
content which we cannot replicate today.
GF: On France, how do you see the market
playing out in terms of consolidation?
GP: We think today that full consolidation, by
which I mean a merger between operators,


GF: And do you think Orange could be part
of a consolidation deal?
GP: In terms of network consolidation, the
answer is yes. Because we have the biggest
network, we have the biggest platform, and
we are open to discussions.
In terms of a merger itself, what we clearly
stated in July was that we would no longer be
the prime mover in a big move.
Why? Because we are the only one that
cannot buy 100% of somebody else without
being obliged to sell a lot of pieces.
Let’s be clear, we have not seen the
number one be the consolidator in any
other country.
This is why we have said if some of our
competitors want to do something together
then we are ready to help if we are requested
to do something, but we will no longer
undertake the first step.
We need the positive impact of
consolidation in France to aid market repair,
but we do not need to be bigger
We have 45% market share in broadband,
we are nearly 40% in mobile, and we know
our room for manoeuvre to go above those
percentages is very limited.
GF: In the UK, what is your position on EE?
A few months back, you said that after the
summer you would look at an IPO again…
GP: The position there is very simple. Two
things: One is a question of timing. We have
agreed with our German colleagues to look
again at a filing once they have made their

decision on the US as to whether they stay or
sell, which I think they may decide before the
end of the year.
Regarding EE, I think the question of
the IPO is also linked with fixed-mobile
convergence in the UK. If we think fixedmobile convergence is not something that
needs to be done rapidly then we might
reopen the IPO project. If, on the other
hand, we think fixed-mobile convergence
will really start next year, then we might first
work on partnership co-operations, maybe
consolidation – I do not know – rather than
trying to prepare an IPO.
This is a real strategic question because
neither Deutsche Telekom nor Orange is in a
hurry to divest and get cash from EE.
In the end we will be happy to monetise
some of our shares in EE, but in the meantime
we would prefer to keep the value of the
asset and strengthen its value than to IPO
and then see another big, big convergent
operator created.
GF: Speaking of fixed-mobile convergence
in the UK, do you see anything happening
GP: Today, not yet. For B2B it has been a
necessity. BT has signed an MVNO
agreement with us, first to provide B2B
convergent services.
When you are talking to small, mediumsized and big companies you need to offer
the whole spectrum of telecoms services,
including fixed-line, fibre and mobile.
This is the reason why Vodafone has bought
Cable & Wireless Worldwide – to have an

The fact
that Phones
4u is under
is not only a sign
of something
specifically to
Phones 4u, but
also a sign that
the distribution
is changing in
the UK

is not on the short-term agenda because
everybody has moved on to something else.
Mr Niel [owner of Iliad] [was] chasing after a
very big prey in America [T-Mobile US]; we
have been moving in Spain; Numericable is
at the end of the process of buying SFR; and
Bouygues has prepared its restructuring plan
to become a leaner company, which means
that everybody has different plans for the
short term.
However, consolidation remains a question
and will be brought back to the table.
How quickly? I don’t know. What we think
is that before having a merger between
operators, we might have more discussions
to share infrastructure.
That is one way to get more value
creation in the short term: for the different
operators to work together on how to
share infrastructure and how to share the
cost of coverage.
We will see whether the competition
authority finally approves the network
sharing agreement between Bouygues and
SFR, but I think there will be discussions
between everybody to cover the rural areas,
and to deploy faster 4G in some areas.
We are likely to have these small pieces of
agreement that might not be the ‘big deal’
we may see in the headlines, but which is a
way to capture some of the synergies that you
would be able to capture in a big merger.

enterprise offer that will be able to compete
against BT.
So we think that convergence is really there
in the B2B field.
Regarding consumer fixed-mobile
convergence in the UK, an evolution is
coming, but it is not coming easily as this
means a change in the distribution.
The fact that Phones 4u is under
administration is not only a sign of
something happening specifically to
Phones 4u, but also a sign that the
distribution is changing in the UK.
I think independent distributors like
Phones 4u and Carphone Warehouse were
not a facilitator of convergence.
The ability of a third party to sell a
combined bundle between fixed and mobile
is lower than the ability of the operator
himself, because of technical features and
confidence of the customer.
The second point is we need to see under
which form BT is proposing quadruple play –
they should do that at the beginning of
the year.
And I think those two points will change
the perspective and then we could start to
see convergence.
In terms of customer experience on data,
convergence becomes key because you
cannot have a good customer experience
through the mobile network only.
You need Wi-Fi and you need the mobile
network, so you need convergence.
GF: We’ve talked about fixed-line in Spain
and the UK, touched on France – what about
other European markets?
GP: We are working on that in Poland, where
we are the incumbent and moving from
copper DSL.
We will present an FTTH fibre plan to the
market and to the Polish authorities before
the end of the year.
And then we have a few countries where we
are mobile only – this is the case in Romania
and Belgium.
In Belgium, we have a very interesting
situation as it is the only country in the whole
of Europe where the regulator has decided to
regulate cable and to oblige cable operators
to open up their networks, so we will launch
that in 2015 – that is one way to go to
GF: And in Poland, Netia is looking for a
mobile partner. Is that something you’ve
looked at?
GP: We might look at it, but I think today the
position of big mobile operators is not to
enter into any MVNO agreements that would
be detrimental to their own business.
Maybe somebody will sign with Netia, but
I’m not sure we will sign if it is just a way to
push the prices down again.
We already have very low prices in Poland
and it is not appropriate to continue to play
that game. 17

eastern europe

New Slovenian PM backs Telekom privatisation,
operators eye Tusmobil, and PPF asks O2 CR for
US$1.1bn loan

Tusmobil sparks interest
Company claims to be Slovenia’s fastest-growing mobile player
Slovenian cableco Telemach and Telekom
Austria are reportedly interested in acquiring
Slovenia’s third-largest mobile operator
A local publication quoted Serbian cableco
United Group, which operates in Slovenia
and Bosnia and Herzegovina under the
Telemach brand, as saying the company is
looking at all assets for sale in Slovenia.
These include Tusmobil, Debitel, T-2,
which the District Court in Ljubljana
recently declared bankrupt, and smaller
cable operators.
Unirted, which provides pay-TV, telephony
and broadband services, has reportedly
declined to elaborate as proceedings
are ongoing.
Ljubljana-based Tusmobil could sell for
about €150m (US$188m), the report stated.
Meanwhile, Telekom Austria, which owns
Slovenia’s second-largest mobile operator
Si.mobil, was also named as a potential suitor
for Tusmobil, which is owned by Slovenian
businessman Mirko Tus’ Tus Holding.
A spokesman for Telekom Austria declined
to comment on the rumours, citing company
policy. However, he pointed out that its

strategic focus is on convergence and inmarket consolidation in countries it is already
active in.
“In Slovenia, we are neither convergent, nor
have we seen any market consolidation yet,”
he said.
Meanwhile, a spokesperson for Tusmobil
said the company is not surprised “several
companies” are interested in buying it as it
has been the country’s fastest-growing mobile
operator for several years. She said: “Since it
is our wish to continue to provide our users

We are not ruling out
any form of strategic
partnership which
would bring said
users new added
value. In today’s
Slovenia, anything
is probably available
for sale, provided the
right partner makes
the right offer


with the latest mobile telephony services,
we are not ruling out any form of strategic
partnership which would bring said users
new added value.
“In today’s Slovenia, anything is probably
available for sale, provided the right partner
makes the right offer.”
Telemach and United Group, majorityowned by US-based private equity firm KKR,
did not respond to requests for comment.

Local operators eye
Meanwhile, MVNO Debitel has attracted
interest from local companies including statecontrolled incumbent Telekom Slovenije, one
local daily reported in late September.
Shareholders ACH Holding and Adria
Mobil, which together own 96% of Debitel,
decided in June to launch a sales process for
the company and mandated management to
disclose relevant data to prospective buyers.
Based in Ljubljana, Debitel provides mobile
and fixed-line telephony and internet.
The company uses the mobile network of
Telekom Slovenije subsidiary Mobitel, the
nation’s largest mobile operator.

Virgin Mobile CEE gains €40m for expansion
The Central and Eastern European unit of MVNO Virgin Mobile,
part of Richard Branson’s Virgin Group , has secured €40m
(US$51.8m) in financial backing from four investors to help fund
expansion plans.
CEE Mobile Capital, Delta Partners Emerging Markets
TMT Growth Fund II, the European Bank for Reconstruction
and Development (EBRD) and the International Financial
Corporation, a member of the World Bank Group, will provide
the €40m in equity capital, Virgin Mobile Central and Eastern
Europe (VMCEE) said in a mid-September statement. Proceeds
will be used to launch the Virgin Mobile brand in Turkey,


scheduled for 2015, fund growth at Virgin Mobile Poland and
finance future expansion opportunities in the region.
The funding creates a combined shareholder group which
also includes the Virgin Group, ePlanet Ventures, Archimedia
and Dirlango.
Virgin Mobile operates as an MVNO internationally, and VMCEE
was founded to develop its business across the CEE region.
The Polish operation launched in 2012, and VMCEE said
the new capital will position it for “significant, accelerated
customer growth”.
VMCEE described Turkey as “a hugely attractive market with a
very large, young, mobile-loving population and very attractive
growth prospects”.

4G auction sees
new entrant

Hungary’s three existing mobile operators,
Magyar Telekom, Telenor and Vodafone,
and new entrant Romania-based Digi have
all received mobile frequencies following a 4G
auction in the country.
The four companies were the only
bidders and will pay a combined Ft130.6bn
(US$529.6m) on its spectrum, the National
Media and Communications Authority
(NMIAH) said in a late September statement.
Licences for the 4G frequencies – in the 800,

900, 1,800 and 2,600 MHz bands – will be valid
until 2034.
Deutsche Telekom-owned Magyar Telekom
will spend Ft58.65bn (US$237.9m) for the
spectrum, while the local units of Norway’s
Telenor and UK-based Vodafone will pay
Ft31.72bn (US$128.6m) and Ft30.2bn
(US$122.5m), respectively.
Digi, a unit of RCS&RDS, Romania’s largest
cable and satellite TV provider and a big
telecoms player in Southeast Europe, will pay
Ft10bn (US$40.5m) for frequencies to launch
services in Hungary.

eastern europe

Hawe aims for full
control of Mediatel

Hawe Group has announced a tender offer
for the shares it does not already own in
telecoms unit Mediatel, as required under
Polish takeover law.
Warsaw-listed Hawe said in a stock
exchange filing in mid-September that it aims
to acquire about 10.18 million Mediatel shares,
equal to a 1.56% stake, in a tender. Hawe
already owns the other 98.64% of shares.
The group will offer PLN0.86 (US$0.27) per
share and the tender period, which began on
6 October, runs until 6 November, reported
a local newspaper. Hawe announced last
December that it would merge Mediatel with
another subsidiary, Hawe Telekom.
As part of the merger process, Mediatel
issued about 1.05 billion new shares to Hawe,
enabling it to boost its stake from 65.97% to its
current 98.64%.

MegaFon inks US$500m vendor financing
MegaFon has signed a US$500m financing mandate agreement
with China Development Bank (CDB) to fund the purchase of
equipment and services from Chinese vendor Huawei.
CDB will act as the mandated leading arranger for the financing,
the Moscow-based telco said in a statement.
MegaFon will use the new Huawei equipment and services to
develop its mobile networks.
MegaFon CEO Ivan Tavrin described the financing as another
milestone in the company’s long-term relationship with the
Chinese bank.

“It underlines MegaFon’s high credit quality and the trust that
our partners place in us as we continue to enjoy strong access to
international capital markets as well as focus on enhancing our
relationships with lenders and equipment suppliers globally.”
The telco’s CFO Gevork Vermishyan noted that CDB has
provided the company with seven facilities since 2001 to fund
purchases from the Chinese vendor.
MegaFon is Russia’s second-largest mobile operator after MTS.
Smaller rivals include state-controlled Rostelecom and Tele2

Regulator announces LTE auction
Telecoms regulator UKE has revealed details
of the much-anticipated LTE spectrum
The authority will award 19 15-year
licences for frequencies in the 800 MHz and
2.6 GHz bands. Auction participants must
submit initial bids by 24 November.
The reserve prices for the licences in the
800 MHz and 2.6 GHz bands are PLN6m
(US$1.81m) and PLN2m (US$605,000)
Each auction participant will be able to
obtain a maximum of two licences, or 20
MHz of spectrum, in the 800 MHz band and
four licences, 40 MHz spectrum, in the 2.6
GHz band.
In February, UKE called off a planned
auction of licences for frequencies in the
700 MHz, 800 MHz and 2.6 GHz bands,

citing procedural concerns. At the time, the
regulator’s president Magdalena Gaj said
“technical problems” had prevented auction
participwants from being able to access
certain documents for two-and-a-half hours.
The UKE could raise up to PLN1.8bn
(US$544m) from the auction, according to a
local business publication.
Poland’s four mobile operators are
Deutsche Telekom’s T-Mobile, Orange,
Polkomtel’s Plus and Play.
A spokesman for Orange said that
UKE’s decision to announce the new
spectrum auction is beneficial for both
the market and consumers as there is
demand for services based on the 800
MHz band.
Orange expects a fast and transparent
auction process which ensures competition
rules are adhered to, he added.

UKE president Magdalena Gaj 19

eastern europe

Fund picks partners for Rostelecom network project


The Russian Direct Investment Fund (RDIF) has reportedly
chosen partners to invest in Rostelecom’s government-ordained
broadband network rollout in rural areas.
Australian fund Macquarie, UAE fund Mubadala and the
Kuwait Investment Authority are likely join RDIF in helping
to fund the project, approved by the government this summer,
Russian newspaper Vedomosti reported.

RDIF is a US$10bn fund created by the government to make
equity investments, primarily in the local economy. The project, to
cost an estimated Rbs67.5bn (US$1.62bn), is set to see Rostelecom
extend high-speed broadband services to more than four million
extra people in rural areas.
RDIF, which has a 1.04% direct stake in Rostelecom, and
co-investors will set up a joint venture which will provide the
Moscow-based telco with loans for the project, the report stated.

Rostelecom plans
Rbs1.7bn FreshTel buy

PPF asks O2 for
US$1.1bn loan
Petr Kellner’s PPF investment group has
asked subsidiary O2 Czech Republic
for a loan of up to Kc24.8bn (US$1.14bn)
to help repay the bank debt it took on to
acquire its majority stake in the telco.
O2, the Czech Republic’s largest
integrated telco and second-largest mobile
operator, announced in mid-October that
PPF has requested a seven-year loan to be
repaid with interest on the maturity date.
“Since O2 Czech Republic does not have
available sufficient resources to provide
the financial assistance, it is assumed that
the provision of the financial assistance
will be subject to obtaining the resources
from external sources,” the Prague-based
company said in a regulatory filing.
O2’s board has decided to carry out
an analysis of the requested financial
assistance and take the steps needed to
approve it.
Netherlands-based PPF closed its
Kc63.6bn (US$3.32bn) acquisition of a
65.9% stake in O2 from Spain’s Telefonica
in January.
The investment firm financed the
purchase with a Kc35.5bn (US$1.85bn)
equity tranche and a €2.89bn syndicated
loan facility led by Societe Generale.
In July, PPF bought an additional
7.2% stake via a mandatory tender offer,
boosting its stake to 73.1%.
O2 confirmed in August that it was
evaluating options to separate its fixedline infrastructure into a new entity to
supply wholesale services.


State-controlled Rostelecom reportedly
plans to buy local WiMax operator FreshTel
in an Rbs1.7bn (US$42.8m) deal.
Rostelecom intends to pay Rbs210m
(US$5.3m) for FreshTel, indirectly controlled
by Russian tycoon Suleiman Kerimov and
Ukrainian billionaire Victor Pinchuk,
and take on long-term debt of Rbs1.5bn
(US$37.5m), a local newspaper reported in
early October citing a source familiar with
the transaction.
This would represent a major discount
to the US$200m valuation mooted when
Russian Railways-owned telco TransTelekom
(TTK) looked at buying the operator, which
provides 4G wireless broadband internet

services in Russia and Ukraine, last year.
The Federal Property Management Agency,
which has a 46.99% stake in Rostelecom,
has yet to approve the US$42.8m valuation,
the report stated. FAS green-lit state-owned
Vnesheconombank’s acquisition of a 99.9%
stake in FreshTel in August. Local reports at
the time suggested the bank was unlikely to
keep the asset for long, naming Rostelecom
as the eventual buyer.
Also in August, Rostelecom and rival
operator Tele2 Russia, co-owned by VEB and
a consortium of local investors, completed
their deal to create a mobile joint venture.
The companies hope the JV will enable them
to better compete with larger mobile rivals
MTS, MegaFon and VimpelCom.

Rbs2bn facility for
Russian Towers

Russian Towers has secured a 10-year
Rbs2bn (US$52m) loan from the Eurasian
Development Bank (EDB) to double the size of
its portfolio.
The towerco said the proceeds will be used
to finance the construction of 1,000 towers
between the start of 2015 and the end of
2016, which it will then lease out to multiple
operators, giving it a total of 2,000 sites.
Dmitry Nelyubov, general director of
Russian Towers, said: “In spite of a challenging
economic environment overall in Russia, our
sector, in which we are the market leader, is
growing with pace.”
“We view the EDB’s decision to fund
our continued development as a strong

endorsement of our business model and
potential for further profitable growth,”
he added.
The EDB expects the project to to help
improve the vcompetition and quality in the
Russian mobile services market.
Russian Towers was founded in 2009 and
has backing from UFG Asset Management,
the European Bank for Reconstruction and
Development, the Macquarie Renaissance
Infrastructure Fund, ADM Capital, Sumitomo
Corporation, and International Finance
In July 2013, the towerco was reportedly
in talks with local telco VimpelCom to
buy more than 5,000 towers for an
estimated US$500m. No such deal has yet
been announced.

eastern europe

Five minutes with... Matej Runjak, Slovenian Sovereign Holding management board member
Lorna Thornber: Can you please describe
where the privatisation process is at for
Telekom Slovenije? How much interest has
there been in the company?
Matej Runjak: We have received first-round
bids and are just about to start with the
management presentations.
They were planned for September, but
we think it’s manageable to have them in
the second half of November. Once due
diligence is completed, we’ll have secondround bids.
The competition is a nice, international
mix so we expect a competitive process.
LT: Why do you think it is such an
interesting asset for these companies?
MR: Telekom is an important player in the
Slovenian market.
It has a substantial market share at home
and interesting operations in other parts
of the Balkans, including Kosovo,
Macedonia, Bosnia and Herzegovina,
Montenegro and Croatia.
It also has a lot of growth potential.

LT: What type of buyer are you looking for?
MR: We would be happy to have a buyer
who knows what to do with the company in
terms of growth. They could be strategic or
financial. We like the mixture of potential
investors because this brings different
prospects for the company. But the process
is about maximisation of price basically,
who’s willing to pay the most. We also have
to respect the EU guidelines.
LT: Are you confident the new government
will support the process?
MR: The new Prime Minister has been

very supportive of the process in media
interviews. This helps us a lot when we
are communicating with the investors, it
provides certainty to have a fully transparent
and fair process and be able to finish it soon.
We already have formal approval for the
privatisation – parliament cleared it last year
and it is the highest authority.
Nothing has changed, we just want the
formal approval of the state as Telekom’s
largest shareholder.
We will try to do everything we can to
accommodate the expectations of investors.
LT: A previous attempt to privatise Telekom
was cancelled in 2010. Why do you think
the process will be successful this time
MR: The legal framework to run the process
is now much clearer, which is very important
for investors.
We do have an up-front approval from the
parliament, we have experienced financial
and legal advisers on our side and we are
also quite advanced on the transaction.

Telekom Slovenije
privatisation to proceed
Slovenia’s new government will support plans
to privatise Telekom Slovenije and 14 other
state-controlled companies, Prime Minister
Miro Cerar has assured.
Cerar, whose centre-left coalition cabinet
took office in September, told a newswire
in early October that the suspended
privatisation process for the incumbent telco
will restart shortly.
While Cerar has spoken out against
privatisations in the past, he has now
reportedly confirmed that his government
will pursue the 15 tabled processes to help
meet its EU-agreed target of reducing the
budget deficit to 3% of GDP in 2015. This year,
it stands at 4.5%.
The privatisations must be completed to
prevent Slovenia from losing credibility, he
was quoted as saying.
Cerar also confirmed that the government
will not split Telekom Slovenije into
infrastructure and service divisions ahead
of the sale in order to retain control of the

Slovenian Prime Minister Miro Cerar
former, as some earlier media reports had
suggested. The prime minister noted that
additional companies may be tabled for
privatisation over the next few months.
The previous government had planned to
take Telekom Slovenije private by the end of
the year and hired Citi as an adviser.
First round bids were received, reportedly

from both strategic and financial investors,
before the process was suspended in early
September pending formal approval from
the new government. Bidders reportedly
included Germany’s Deutsche Telekom,
Russia’s MTS and Turkey’s Turkcell as well as
private equity firms Apax, Bain Capital and
Matej Runjak, head of Slovenian Sovereign
Holding (SDH), which is managing the
privatisation processes, told TelecomFinance
he is confident the sale of the incumbent
telco will be completed, saying: “We are on
the right track.”
Stressing that SDH wants to move quickly,
Runjak said the process will ideally be
finalised in the first quarter of next year.
The state controls 72.38% of shares in
Telekom Slovenije, which has a market
capitalisation on the Ljubljana bourse of
€941.44m (US$1.19bn).
The remaining shares are held by individual
shareholders, local and foreign companies,
institutional investors, brokerage houses and
the company itself. 21

middle east / africa
Botswana’s BTCL gears up for November IPO, Brazilian
telco Oi looks to divest itself of Africatel, and Camtel
enters Cameroon’s mobile market

Oi to offload Africatel
Telco pursues
strategy of selling
non-core assets
The board of Brazilian operator Oi has
resolved to sell the 75% stake in Africatel it
inherited following its merger with Portugal
Telecom (PT).
Africatel holds stakes in a number of
mobile operators in sub-Saharan Africa,
including a 25% stake in Angola’s Unitel.
In a recent securities filing, the Brazilian
telco said it has not yet received a bid for the
African group.
Oi’s decision to sell Africatel is in line
with previous comments made by former
CEO Zeinal Bava, who said the telco would
continue to offload non-core assets to
improve its financial profile and invest
in growth opportunities in Brazil which,
according to reports, could include an
acquisition of larger rival TIM Brasil.
These rumours have been fuelled by
recent indications that telecoms holding
Altice is interested in buying Oi’s Portuguese
operations (see page 8). An asset sale would
give the Brazilian company increased
firepower for potential acquisitions.
Oi’s move to sell its Africatel stake comes
amid a disagreement with Samba Luxco, an
arm of Africa-focused private investment firm

Oi’s former CEO Zeinal Bava
Helios Investment Partners, which owns
the other 25%
of Africatel.
Samba Luxco has told Oi that its merger
with PT – which previously held the 75% of
Africatel – has triggered the firm’s option
to sell its 25% stake due to the indirect
ownership transfer of Africatel shares.
Oi disputes this and has said the PT merger
did not affect the Africatel shareholder
agreement. Despite the difference of
opinion, Oi has asked Samba Luxco to work
with it so the two shareholders can sell in a
coordinated manner to maximise the value

of their investments. However, Oi has also
said it plans to dispute Samba Luxco’s right to
sell its shares separately, noting that it could
commence arbitration to resolve the matter.
In addition to the Unitel stake, Africatel
holds a 34% interest in Namibian mobile
operator MTC, 40% in Cape Verde telco CVT,
and 51% in Sao Tome and Principe’s mobile
and fixed-line player CST.
At the end of August, Oi was reported to
be in discussions to sell its Unitel stake and
fellow shareholders Isabel dos Santos and
Angolan state-owned oil company Sonangol
were named as possible buyers.

Orange eyes listing of African assets

French incumbent Orange is mulling over the possibility of hiving off
its African and Middle Eastern operations.
An IPO of these assets would enable Orange, which is present in
almost 20 countries in those two regions, to free up cash that could be
used to reduce its €27bn debt pile and explore new deals.
As considerations are still at an early stage, details and timing have
yet to be decided, a spokesman said.
However, he stressed that the group development in Africa and the
Middle East “remains a key part of [its] strategy”.


The French group recently sold its under-performing Ugandan
subsidiary and has launched a strategic review for its struggling
Kenyan unit.
Separately, Orange is looking at a call option to increase its
40% stake in Morocco’s Meditel to 49%, as agreed under its 2010
shareholder agreement. The stake increase could become effective
from January 2015.
Orange has also been busy in Europe. It recently made a €3.4bn
(US$4.4bn) bid for Spanish fixed-line operator Jazztel in an effort to
bolster its position in the highly-competitive local market (see page 4).

middle east / africa

Weak demand for Zain Bahrain flotation
Kuwaiti mobile operator Zain has raised an
expected BD9.12m (US$24.12m) from the
sale of a 15% stake in its Bahraini unit on the
local bourse, with only 34.8% of offered shares
going to retail and institutional subscribers.
These subscribers paid BD0.19 (US$0.50)
per share for about 16.71 million of the 48
million shares on offer, said Zain Bahrain
and Gulf International Bank (GIB), the lead
manager on the transaction.
The remaining 31.29 million shares, equal
to a 65.2% stake, were allotted to GIB.
The BD0.19 per share price tag values
the Bahraini mobile operator at BD69.92m
In mid-September, Zain Bahrain extended
the subscription period for the offering,
which was open to investors in Bahrain and

the wider Gulf region, by two weeks. Watani
Investment Company, trading as NBK Capital,
was the co-manager for the offering. Joint
financial advisers and bookrunners were

Zain missed a
deadline to float 15%
of the unit within a
decade of obtaining a
licence, as per local


GIB and NBK Capital. Deloitte & Touche
Middle East acted as auditor, while Trowers
& Hamlins and Zu’bi & Partners were
legal advisers.
In 2013, Zain missed a deadline to float
15% of the unit within a decade of obtaining a
licence, as per local requirements.
The company finally launched the process
earlier this year by submitting a listing
request to Bahrain’s ministry of industry
and commerce.
In May, Zain paid US$12.5m to boost its
stake in the Bahraini unit by 6.25% to 62.5%,
allowing it to retain a controlling stake once
it is listed.
Zain Bahrain claims to be the secondlargest player in the country. Its competitors
are Batelco and Viva. Zain is also planning to
list its Iraqi mobile unit and has mandated
Melak Investments to lead the IPO.

Government plans BTCL
IPO for November
The government plans to launch the longawaited IPO of incumbent Botswana
Telecommunications Corporation (BTCL) on
7 November.
During a mid-September press conference,
transport and communications minister Nonofo
Molefhi disclosed a few details about the process,
saying the government will offer 49% of BTCL’s
Of those, 44% will be made available to local
individuals and companies while the remaining
5% will be retained for BTCL employees through an
employee share ownership programme. “Many of

us have waited with great anticipation to hear news
of when we, too, could own a piece of this business
that, in many ways, has proven to be a building
block of our economy,” Molefhi said.
The privatisation of the state-owned operator,
founded in 1980, has been in the pipeline since
2010 but financial and regulatory hurdles have so
far stood in the way.
BTCL provides a range of services, including
fixed-line, mobile, internet wholesaling and data
services. It is Botswana’s third-largest mobile
operator under the Be Mobile brand. BTCL
reported revenues of Pk1.375bn (US$146.85m)
in 2012/2013 compared with Pk1.187bn
(US$126.77m) in 2011/2012.

Many of us have waited
with great
anticipation to hear
news of when we,
too, could own
a piece of this
business that, in
many ways, has
proven to be a
building block of
our economy

Altice mulls Outremer Telecom sale

Telecoms holding Altice is reportedly gearing up to sell its
majority stake in Outremer Telecom, an alternative operator
in French overseas territories across the Caribbean and Indian
Ocean, to alleviate regulatory concerns.
Altice is seeking approval to merge its French cable unit
Numericable with local mobile operator SFR, which is a dominant
player in the overseas markets of La Reunion and Mayotte.
If combined, Numericable and SFR would reportedly control over
70% of the mobile market in both territories. Talks are ongoing
for a potential sale, French news agency AFP cited a source close


to the situation as saying. In July last year, Altice completed its
acquisition of a 67% stake in Outremer – which provides fixed,
mobile and internet services in Martinique, Guadeloupe, French
Guiana, Reunion and Mayotte – from Axa Private Equity.
This April, the holding agreed to buy Vivendi-owned SFR for
€13.5bn in cash. Altice plans to merge Numericable and SFR to
create a converged entity.
France’s competition authority opened an in-depth, phase II
review of the SFR-Numericable deal a couple of months ago, saying
the detailed examination was necessary because “the transaction
raises serious doubts about hindering competition”.
A decision is expected imminently. 23

middle east / africa

Maroc Telecom eyes new tech deals
Abdeslam Ahizoune, chairman
and CEO of incumbent Maroc
Telecom, met with the Ivorian
president Alassane Ouattara
in late September to discuss
potential investments in the
West African country.
According to a statement
published on the president’s
official website, Ahizoune
enquired about opportunities
to invest in the country’s new
No further details were
disclosed about the meeting and
Maroc Telecom did not respond
to a request for comment.
The telco is expected to soon
have its own mobile carrier in
Cote d’Ivoire. Etisalat recently
acquired a majority stake in
Maroc Telecom and, as part of the
deal, agreed to sell its operations
in six West African countries,
including Cote d’Ivoire, to the
Moroccan company.
Etisalat did not disclose the
rationale behind the deal, but an

Alassane Ouattara, the Ivorian president, has met with Maroc Telecom CEO Abdeslam Ahizoune
analyst told TelecomFinance at
the time that the decision was
motivated by Maroc Telecom’s
success with its own subsidiaries
in the region – in Burkina Faso,

Vodafone seeks
E£4bn loan
Vodafone Egypt, the country’s
largest mobile operator, is reportedly
looking to secure a E£4bn (US$559m)
loan from seven banks before the end
of the year.
The transaction is currently in its
final approval stage, according to a local
publication citing banking sources.
The seven lenders working on the
transaction reportedly are Bank of
Alexandria, Banque Misr, Barclays,
Commercial International Bank,
Emirates NBD, HSBC, National Bank of
Egypt and Qatar National Bank.
Separately, the government recently
gave state-owned fixed-line telco
Telecom Egypt (TE) until the end of
2015 to exit its 45% stake in Vodafone,
according to local reports.
The announcement came after TE
was awarded a unified licence to also
provide mobile services, first as an
MVNO and later as an MNO once it
secures spectrum.
The stake sale is aimed at avoiding a
conflict of interest.


Gabon, Mali and Mauritania.
In late May, Cote d’Ivoire’s
communications ministry called
for the country’s three smallest
mobile players to merge to create

a viable fourth operator with a
10% market share. At present,
Orange and MTN both control
around 35% of the mobile market
while Etisalat has 20%.

Camtel secures fourth
mobile licence
Fixed-line incumbent Camtel has received a
15-year licence to provide mobile services in
the country.
With this permit, Camtel becomes
Cameroon’s fourth wireless player
behind MTN, Orange and new entrant
Viettel’s Nextell.
Henry Lancaster, a senior analyst at Paul
Budde Communication, told TelecomFinance
that this new licence is aimed at fostering
competition in the mobile market, which
remains underpenetrated.
“MTN currently has about 62% market
share by subscribers, while Orange accounts
for the remainder.
“The thrust towards greater competition
can also be seen in the government’s
rejection of Nextell’s bid for an extension
of its monopoly on 3G services, with MTN
and Orange being permitted to provide 3G
services from 2015,” said Lancaster. He added
that although competition is expected to

intensify, there will not be major changes
in the short term given MTN and Orange’s
“existing dominance, the assets at
their disposal and their imminent ability
to compete with the new players for
3G services”.
So far, only Nextell has been allowed to
offer such services. Vietnam’s Viettel became
Cameroon’s third mobile operator in late
2012 following a government-run tender for a
2G/3G licence.
“If Camtel becomes a successful full-service
player, it would certainly make the company
a more attractive target for investors who
may want to capitalise on the potential for
converged services, but the ongoing and
much-delayed privatisation process remains
mired in government uncertainty about the
best approach to take,” he concluded.
Budde Communication estimates that
mobile penetration in the country, which has
a population of over 22 million, will reach 73%
by the end of 2014.

Telecom Namibia and
MTC to be split up
The government has decided to separate
incumbent Telecom Namibia and
mobile operator MTC by dismantling the
state holding company which owns them,
according to ICT minister Joel Kaapanda.
Kaapanda told a local newspaper that
the government’s shares in MTC, the
nation’s largest mobile operator, will be
transferred from Namibia Post and
Telecommunications Holdings (NPTH)
to the ICT ministry.
NPTH has a 66% stake in MTC, while
Portugal Telecom owns the remaining shares.
The holding company holds 100% of Telecom
Namibia. Kaapanda was quoted as saying
that the government made the decision to
dismantle NPTH, which also owns Namibia
Post and a properties division for its three
subsidiaries, “a few months ago”. The holding
company’s properties and liabilities will
be distributed among the subsidiaries,

he said. MTC has been directed to buy its
own headquarters for an amount yet to be
determined, Kaapanda reportedly noted.
However, before this happens, there will
be an independent audit to help determine
how NPTH should be dismantled, the
minister said.
He added that he is waiting for a
committee, made up of the holding
company’s board members, to announce
which firm will carry out the audit so an exact
timeframe for the process can be given.
Kaapanda reportedly said he expects
Telecom Namibia and MTC to enter a “new
era” early next year. Explaining the rationale
for the separation, he was quoted as saying
it is “not good governance” for Telecom and
MTC to be combined. He conceded that
NPTH was originally created to help out
Namibia Post, which was in financial trouble.
Besides MTC, Namibia is also home to
TN Mobile, which is 100%-owned by
Telecom Namibia.

middle east / africa

HTN issues
US$250m bond

Helios Towers Nigeria (HTN), an affiliate
of Helios Towers Africa (HTA), has placed
US$250m worth of 8.375% senior unsecured
notes due 2019.
The issuance was revealed in a Fitch
Ratings announcement which gave the notes
a final B rating.
Detailing the rating drivers, Fitch said
HTN is a rapidly-growing towerco in Nigeria,
where demand for telecoms services is quickly
increasing. The agency also noted it has good
revenue visibility because of long-term lease
However, Fitch pointed to a need to
deleverage and to the risk of increased
competition in the country as more tower
assets come up for sale.
Rival tower operator IHS recently took
control of more than 11,000 towers from
Etisalat and MTN in Nigeria. Reports suggest
that Bharti Airtel is close to agreeing a deal
for 4,000 of its sites in the country with either
American Tower or IHS.
In July, HTA bought 3,100 sites in four
undisclosed African nations from Bharti.

Wananchi inks US$130m equity funding
Kenya-based media and telecoms group
Wananchi has secured US$130m in financing
to fund its growth and expansion in Eastern and
Southern Africa.
The capital investment was co-led by existing
Wananchi shareholders including Altice,
Liberty Global, Emerging Capital Partners
(ECP) and ATMT along with new investor Helios
Investment Partners, according to a company
Richard Bell, vice chairman of Wananchi, said
the financing will help the company continue
to roll out fibre-to-the-home networks in more
East African cities and extend its business service

networks and product offerings across multiple
geographies and market segments.
Dennis Aluanga, a partner at Helios,
commented: “We believe this capital injection
will enable the Wananchi Group to extend
the coverage of its infrastructure as well as
build upon its strong broadband-led tripleplay product offering, including direct-tohome satellite products to many more tens of
thousands of customers across the greater east
Africa region and beyond.”
Wananchi offers DTH pay-TV, fibre broadband
and telephone services to private customers
under the Zuku brand and corporate services
under the SimbaNet, Wananchi Telekom and
iSat brands.

Wananchi vice chairman Richard Bell

OTMT says no decision on Mobinil stake

OTMT’s Naguib Sawiris

Egypt’s Orascom Telecom Media and
Technology Holding (OTMT) has not taken any
decisions with regards to the sale of its 5% stake
in local operator Mobinil to French incumbent
Orange. On 30 September, trading in OTMT’s and
Mobinil’s shares was briefly suspended pending an
announcement from the Egyptian holding.
Trading quickly resumed after OTMT said in a
notice to the Egyptian Exchange that it has not
taken any decisions regarding its put option to sell
its five million shares in Mobinil to MT Telecom
SCRL, a wholly-owned subsidiary of Orange. The

announcement followed local reports that quoted
the Egyptian billionaire, and OTMT chairman,
Naguib Sawiris as saying that he planned to sell the
Mobinil stake. In May 2012, Orange, then known as
France Telecom, completed a tender offer to buy
a 94% stake in the Egyptian mobile operator via
its MT Telecom subsidiary. OTMT, which directly
and indirectly controlled 34.67% of Mobinil before
the €1.5bn transaction, retained a 5% stake in the
company. Orange previously held 36.33% of the
operator while 29% was in free float.
Mobinil is Egypt’s second-largest wireless player
behind Vodafone. 25

middle east / africa

Zantel chairman dismisses
sale rumours

The chairman of Tanzania’s Zantel, Essa Al
Haddad, has reportedly rebuffed suggestions
that UAE parent Etisalat is considering selling
its 65% stake in the mobile operator.
Instead, Al Haddad noted that Etisalat has
actually increased its stake to 85%, without
commenting on when the acquisition took
place, according to local reports. In late
September, a Bloomberg report cited sources
as saying that the UAE company had hired
Deutsche Bank to advise it on a potential sale,
and interested parties included local operators
Vodacom Tanzania and Millicom’s Tigo.
Etisalat did not respond to requests to
elaborate on the matter while Millicom declined
to comment. Vodacom said it is constantly
looking at growth opportunities but refused to
comment on any specific country or company.
Zantel is among the smallest mobile
operators in Tanzania, which is home to six
players in total, and faces tough competition
from market leaders Vodacom, Airtel and Tigo.
As of June 2014, Zantel had 1.72 million
subscribers, down from two million a year
before, according to the country’s telecoms

Zantel’s chairman Essa Al Haddad, centre, has denied that Etisalat is looking to sell the company
regulator. This represents a 6% market share as
opposed to 7.5% previously.
In late May, the Etisalat subsidiary reportedly
defaulted on a US$96m loan.
Etisalat first bought a stake in Zantel in
1999 and later increased it to 65%. The other
shareholders were the government of Zanzibar
(18%) and Meeco International Company
(17%), as of May. Vodacom, in comparison,
has been faring well, adding almost one
million subscribers in a year to reach more

than 10 million customers. Earlier this year, its
South African parent boosted its stake in the
Tanzanian unit from 65% to 82.2%.
Vodacom said it wanted to have more
exposure to the business, which it described
as its most successful investment outside of
South Africa.
Vodacom also pointed to Tanzania’s
60% mobile penetration rate as another
reason for the stake increase, saying it was
a high-growth market.

Government explores Vodacom exit

The South African government is reportedly considering
selling its 13.9% stake in the country’s largest mobile
operator, Vodacom.
The government plans to use the proceeds from the sale to bail
out state utility company Eskom Holdings, according to a newswire
report citing four people familiar with the situation.
Based on Vodacom’s current market capitalisation, the stake is
valued at R25.5bn (US$2.3bn).

A spokesman for the operator said it was not aware of any such
developments while British telco Vodafone, which has a 65% stake
in Vodacom, was unable to comment.
South Africa’s treasury did not respond to a request
for comment. Vodacom is the number one player in
South Africa’s mobile market, followed by MTN, Cell C and
state-owned Telkom.
Earlier this year, it agreed to buy 100% of local fixed-line player
Neotel for R7bn (US$676.7m).

Vodafone Qatar buys NBN
Vodafone Qatar has agreed to buy 100% of state-owned Qatar
National Broadband Network (QNBN) to boost its presence in
the fixed-line market.
The deal size has not been disclosed but reports have estimated
QNBN is worth about QR210m (US$57.6m). Vodafone Qatar expects
the transaction to close by the end of the year.
In a statement, it said: “Completion of the transaction is conditional
upon regulatory approvals and consents, completion of due diligence,
agreement on the consideration payable, the arrangement and
provision of funding to finance the acquisition and entry into a
definitive share purchase agreement.”
The company added that it does not believe the relationship


between the parties produces any conflict of interest. Commenting
on the rationale behind the deal, Qatar’s second and smallest mobile
player said: “Vodafone Qatar believes that the transaction will be a
major contributor towards the achievement of the policy objectives
laid down in the national broadband plan and underlines Vodafone
Qatar’s commitment to delivering world-class telecommunications
services to Qatar.”
QNBN was set up in 2011 and started rolling out a dark fibre network
across the country in 2012 open to all telecoms services providers. It
expects to complete construction by 2015.
Vodafone Qatar provides both mobile and fixed-line services. It is
23%-owned by the UK’s Vodafone Group while Qatari institutions
hold 37%. The remaining shares are in free float.
The country’s largest mobile operator is Ooredoo.

Virgin Mobile launches MVNO

Virgin Mobile Middle East and Africa
(VMMEA) started offering MVNO services
in Saudi Arabia in late September.
VMMEA, set up in June 2012 in
partnership with Middle Eastern MVNO
Friendi Group, has launched two brands in
the Saudi market: Virgin Mobile, targeting
young people; and Friendi Mobile, aimed at
expatriate workers.
VMMEA, which was awarded the MVNO
licence in March 2014, is benefiting from
the Saudi regulator’s decision to ask the

country’s three mobile network operators
– Saudi Telecom (STC), Mobily and Zain
KSA – to host an MVNO in a bid to boost
While VMMEA partnered with the
kingdom’s largest carrier, STC, rival
Jawraa Lebara will operate on Mobily’s
Dubai’s Axiom Telecom had teamed up
with Zain for the launch of MVNO services
but, in April, the regulator reportedly
ordered the licence to be retendered.
Saudi Arabia is the second Gulf
country to allow MVNOs after Oman, which

middle east / africa

granted a licence to Virgin Mobile in
2009. VMMEA’s main shareholders
include the Gulf Investment Corporation
(GIC), which made a US$50m in the
MVNO in March last year, and the
Virgin Group.
The company, which also operates
in Oman, Jordan, South Africa and
Malaysia, believes that by introducing
MVNOs in Saudi Arabia, they will spur
mobile operators and telecoms regulators
across the region to accelerate plans
to introduce the MVNO model in their
own markets.

Viettel to enter mobile market
Vietnamese state-owned operator
Viettel has received a
licence to build a 3G mobile
network in Tanzania, according
to the East African country’s
deputy communication,
science and technology minister
January Makamba.
Viettel will start building the
national network on 1 November
and is expected to launch services
in July next year, Makamba was
reported as saying.
The minister said Viettel’s plan
to extend its fibre optic network
to rural areas aligns with the
government’s goal of “digital
The Vietnamese telco will add
an extra 13,000km of fibre cable
to an existing 8,000km network.
It intends to focus on rural areas
where about 4,000 villages without
any network access are expected to
be connected by 2016, Makamba
noted. Tanzania’s four major
mobile network operators are

Tanzania’s deputy communication, science and technology minister January Makamba
the local units of South Africa’s
Vodacom, India-based Bharti
Airtel, Millicom’s Tigo and
Zantel, which is controlled by

UAE-based Etisalat. Overall, six
players currently operate in the
country. Viettel has international
operations in Cambodia, Laos,

Haiti, Peru, Mozambique and
Cameroon, which it entered in late
2012 following a government-run
tender for a 2G/3G licence.

Etisalat mulls US$500m bond offering

UAE operator Etisalat is reportedly
considering launching its first ever sukuk,
which could raise up to US$500m, before the
end of the year.
Etisalat is discussing the potential Islamic
bond with banks, according to local and
international reports.
Terms are likely to be similar to those of
the telco’s US$4.24bn debut bond issued in

June, one local publication cited a global
banking source as saying.
While documentation is likely to be
completed shortly, giving the company
flexibility with timing, the offering is most
likely to be launched in 2015, according to a
news agency report.
Proceeds will reportedly be used to
improve the telco’s network infrastructure.
Etisalat did not respond to a request for
comment. Proceeds from the US$4.24bn

bond, split into two euro and two US dollar
tranches, were used to finance the telco’s
€4.1bn purchase of a 53% stake in Maroc
The euro tranches were valued at €1.2bn
each, while the dollar tranches were worth
US$500m each. Moody’s rated the debut
bond, issued under a recently-established
US$7bn global medium-term note
programme listed on the Irish stock exchange
Aa3, S&P gave it an AA- and Fitch an A+. 27


STP buys 3,500 towers from XL Axiata, Alibaba IPO
values Softbank’s stake at US$75bn on first day of
trading, and Reliance Jio secures US$750m loan

XL Axiata sells towers to STP
Planned deal marks Indonesia’s largest ever tower sale

Mobile operator XL Axiata plans to sell
3,500 towers to local towerco Solusi Tunas
Pratama (STP) for Rp5.6trn (US$460m) in a
sale-and-lease-back deal.
The consideration for the sale will be
entirely in cash and paid at closing, which it
expected to take place by the end of the year.
The agreement, which marks Indonesia’s
largest tower deal to date, will see XL Axiata
lease back the 3,500 sites for 10 years. The
operator, majority-owned by Malaysian giant
Axiata, said it has secured competitive terms
as the towers’ “anchor tenant”, and expects to
benefit from ongoing capex and opex savings.
XL Axiata CEO Hasnul Suhaimi described
the transaction as a step towards an “assetlight strategy”, which enables the company to
focus on its core business.
“The sale unlocks the value of a part of our
tower portfolio at an attractive valuation and
on competitive terms,” he said.

He added that the proceeds will be used to
help deleverage.
STP president director Nobel Tanihaha said
his company is pleased to gain a quality tower
portfolio with significant secured tenancies
and potential for further leases.
“This transaction solidifies STP’s position
as a top-three independent tower operator
with a strong tower portfolio across
STP claimed to own and operate more
than 2,786 towers in Indonesia prior to this

The sale unlocks
the value of a part of
our tower portfolio
at an attractive
valuation and on
competitive terms


transaction. BofA Merrill Lynch acted as
XL Axiata’s exclusive financial adviser on
the deal, while Standard Chartered and JP
Morgan provided financial advice to STP.
XL Axiata confirmed in July that it
planned to offload some of its infrastructure
in the second half of the year to repay part
of its debt.
The operator, which serves 62.9 million
customers nationwide, wrapped up its
acquisition of smaller rival Axis Telekom
for US$865m in March. Its total liabilities
were up 93% year-on-year at the end of H1
to Rp45.4trn (US$3.74bn), largely due to
borrowings related to the acquisition.
Tower Bersama, another local towerco, had
also expressed interest in XL Axiata’s towers.
Other rumoured suitors included Sarana
Menara Nusantara and Inti Bangun Sejahtera.
Another Indonesian operator, Indosat,
has also been considering options for its
remaining 7,500 towers, after selling 2,500
sites in 2012.

PE firm plans GTA stake sale

Japanese private equity firm Advantage Partners is reportedly
preparing to sell its majority stake in Guam incumbent telco
TeleGuam Holdings (GTA).
Advantage has hired Citigroup to find potential buyers for the
stake, which could command a price of more than US$300m,

according to a newswire report citing people with direct
knowledge of the matter. The PE firm bought the stake in 2011 for
a reported Y10bn (US$120m), including liabilities.
GTA provides wireless and fixed-line telephony, broadband
internet and pay-TV services. It is the leader in the Pacific island
nation’s fixed-line segment, while Docomo Pacific is the number
one player in the mobile and pay-TV markets.

Officials weigh closure of BSNL and MTNL

Government officials reportedly met recently
to discuss closing down some loss-making
state-owned companies, which could include
mobile operators Bharat Sanchar Nigam
(BSNL) and Mahanagar Telephone
Nigam (MTNL).
Cabinet secretary Ajit Seth called the
meeting to explore options for the futures
of 10 companies with a combined net
loss of Rs245bn (US$4bn) in 2012/2013,


the Economic Times reported in midSeptember. Department of Public Enterprises
officials have drawn up proposals for shutting
down some of them.
An earlier report said the Department
of Telecommunications (DoT) had set a
deadline of 31 July 2015 to conclude a merger
between BSNL and MTNL.
The department reportedly said in a recent
presentation to Prime Minister Narendra
Modi that it expected the government to
approve the proposed merger by 30 June

next year. According to this report, the DoT
also set deadlines to complete organisational
restructuring plans at both telcos ahead of
the merger. These include a cut-off date of
31 December 2014 to spin off BSNL’s mobile
towers into a separate, wholly-owned unit
and to monetise some of the telcos’ property
assets. BSNL and MTNL have both been
struggling in India’s crowded mobile market
and, since 2010, several options have been
considered to revive them, including a merger
and tower sales.


Watchdog launches 4G auction
Macau’s telecoms regulator has launched a
two-month 4G auction that is due to end on
18 November. On offer are four eight-year

licences that will be issued to the winning
bidders next year.
They reportedly come with the requirement
to cover half the territory by the end of
2015, and 100% of it in 2016. Only Macau’s

Jio raises US$750m
in vendor financing
Nascent mobile operator Reliance Jio
Infocomm, a subsidiary of conglomerate
Reliance Industries, has inked a US$750m
loan backed by Korea Exim Bank.
Reliance Jio will use the funding to acquire
telecoms equipment from South Korean
vendor Samsung.
The 12-year loan is Korea Exim’s largest
telecoms infrastructure financing and its
largest deal in India, according to a Reliance
Jio statement in late September.
Korea Exim is providing US$440m of the
loan. The remaining US$310m is financed
by 11 relationship banks: HSBC, ANZ, Banco
Santander, Bank of Tokyo-Mitsubishi-UFJ,
BNP Paribas,Credit Agricole,Commerzbank,
ING, JP Morgan, Mizuho and SMBC. New
lender NongHyup Bank also worked on
the deal.
Reliance Jio, the latest entrant in India’s
crowded mobile market, aims to launch 4G
services by early 2015. To do so, it agreed to
pay US$1.7bn to secure 1,800 MHz spectrum
in the February auction, adding to its existing
2,300 MHz frequencies. In recent months,
the company has also inked multiple
infrastructure-sharing agreements with
rival operators.
It will cost Reliance Jio an estimated
Rs700bn (US$11.46bn) to roll out its

network, according to local reports. In August,
it was reported that the company was looking
to raise about Rs90bn (US$1.46bn) in overseas
debt financing.

Industries boosts Jio
stake to 99%
Meanwhile, Reliance Industries has increased
its holding in Reliance Jio to 98.9%.
The parent company increased its stake
from 95%, a spokesperson confirmed.
“As the Reliance Jio project progresses,
incremental financing is being raised as
a combination of debt and equity,” the
spokesman said.
“The equity has been subscribed to
by Reliance Industries, while remaining
shareholders have not subscribed to the
rights issue by Reliance Jio.”
He stressed that Reliance Industries has
subscribed to the equity at par only and has
not bought stock from other investors.
Father-and-son investors Mahendra
and Anant Nahata now have just 1% of the
mobile operator as they have not made any
investments to help it roll out services since
2010, according to local reports.
The Nahatas reportedly still have a seat on
the Reliance Jio board.

dominant mobile player CTM has reportedly
confirmed interest in participating so far,
although Hutchison Macau, China
Telecom Macau and SmarTone are
expected to take part too.

TM closes P1

Telekom Malaysia (TM) has completed
its MR350m (US$106.3m) purchase of
local WiMax operator Packet One (P1),
after securing regulatory and shareholder
The Malaysian incumbent bought a 55.3%
stake from former controlling shareholder
Green Packet and Korea’s SK Telecom,
which saw their stakes fall to 31.1% and
13.6%, respectively.
Other minority shareholders, such as
US technology giant Intel, have exited the
The deal sees the incumbent re-enter the
mobile market after exiting it in 2008. TM said
the transaction was also an opportunity to
work with Green Packet and SK Telecom to
drive synergies for the three companies.
TM said: “It essentially enables P1 to
crossover to LTE and offer full mobility while
providing TM with an LTE-ready platform
to accelerate and more efficiently make
wireless broadband products available to its
“This includes access to suitable spectrum
bands, the ability to draw on advanced
technological know-how of SK Telecom, an
existing customer base to build on, and the
strong base of LTE upgradeable WiMax sites
to quickly achieve extensive LTE coverage.”
All three companies will be represented
on the board. Green Packet was advised by
RHB Investment Bank and JP Morgan, while
TM mandated CIMB Investment Bank and
Goldman Sachs.

KKR mulls US$230m Infratel exit


US-based private equity firm KKR
could reportedly raise about US$230m
in a sale of shares in towerco Bharti
Infratel, exiting the investment after
six years.
KKR has asked investment banks
including Morgan Stanley, UBS and
Citigroup for pitches to advise it on
the planned sale via block trades on
the stock exchanges, according to a

late September report citing a person
with direct knowledge of the matter.
The private equity firm has 45.07 million
shares, equal to a 2.38% stake, in Infratel,
which is majority-owned by telecoms giant
Bharti Airtel.
At the time of writing, Infratel
shares were trading at Rs298.87
(US$4.91), valuing KKR’s stake at
Rs13.47bn (US$221.37m).
KKR first acquired a stake in Infratel
in February 2008 for US$250m.

Bharti Airtel raised more than Rs21bn
(US$350m) from the sale of a 4.5% stake
in Infratel on the Bombay and national
stock exchanges in August.
Infratel, which was listed for US$760m
in late 2012, is looking to extend its
footprint across Asia as more operators
prepare to offload towers to focus on
their core operations.
The company has more than 36,000
standalone towers across 18 states and
11 service areas in India. 29


CVC prepares for HKBN IPO

Private equity firm CVC Capital Partners has reportedly
received pitches from banks to advise it on a planned IPO of
Hong Kong Broadband Network (HKBN).
The listing, set to take place in Q1 2015, could raise between
US$500m and US$1bn, the Wall Street Journal reported in October
citing people with knowledge of the matter. London-based CVC
acquired HKBN from Honk Kong’s City Telekom for HK$5bn

(US$645m) in May 2012, describing it as one of the country’s
largest leveraged buyouts.
CVC and HKBN both declined to comment. HKBN provides
broadband, VoIP, IPTV and international telecoms services to
residential and corporate customers. Its network passes about two
million of Hong Kong’s 2.5 million households.
CVC is reportedly also working to raise about US$800m from the
sale of its 49% stake in Indonesia’s largest broadband and cable TV
operator Link Net.

Bersama to acquire Mitratel
stake in share-swap deal
Tower Bersama Infrastructure (TBIG)
has reached an agreement with Telkom
Indonesia (Telkom) to acquire a 49%
stake in its tower unit Mitratel in a shareexchange deal.
State-controlled Telkom will initially swap
the 49% stake in Mitratel, which owns and
operates 3,928 towers serving 4,363 tenants,
for 290 million new TBIG shares, representing
about 5.7% of its enlarged share capital.
Indonesia-listed TBIG, majority-owned by
Saratoga Capital and Provident Capital, will
then assume management control of Mitratel
and consolidate it into its accounts.
The incumbent telco has a two-year option
to exchange its remaining 51% stake in the
tower unit for an extra 472.5 million TBIG
shares, which would boost its stake in the
infrastructure company to 13.7%.
In addition, Telkom will receive a

cash consideration of up to Rp1.739trn
(US$142.36m) provided Mitratel reaches
certain performance targets.
TBIG CEO Hardi Wijaya Liong said the
company views its new strategic partnership
with Telkom as a “major milestone”. He

This partnership
allows us to
significantly add to
the current scale of
our business, both
from a tenancy and
revenue perspective


said: “This partnership not only allows us to
significantly add to the current scale of
our business, both from a tenancy and
revenue perspective, as well as our
geographical footprint, but it also strengthens
the business relationship between TBIG and
the Telkom Group.”
The companies expect the deal, which is
subject to various approvals including those
of TBIG shareholders, to close in Q4 this year.
Telkom president director Arief Yahya first
revealed plans to sell a 49% stake in Mitratel
to enable it to focus on its core business in
July last year.
The deal marks the second large tower deal
in Indonesia in October. Earlier in the month,
mobile operator XL Axiata agreed to sell 3,500
towers to local towerco Solusi Tunas Pratama
for US$460m in a sale-and-lease-back deal.
TBIG claimed to own and operate 11,266
telecoms sites serving 18,028 tenants as of
30 June 2014.

Smartfren confirms Bakrie merger talks
Telco Smartfren has confirmed it is in talks
with local peer Bakrie Telecom about a
potential merger.
It told the country’s stock exchange on 25
September that a binding agreement had not
been reached with Bakrie Telecom, which
is reportedly being sued by investors after
allegedly missing two interest payments on a
US$380m bond.
A local publication had earlier cited Bakrie
Telecom’s COO, Imanuddin Kencana Putra,
as saying it was considering a merger with
Smartfren, one of the smallest players in
Indonesia’s crowded mobile market. The two


networks share the same CDMA technology,
which ratings agency Fitch said in May was
falling out of favour in the country. The
ratings agency also said Smartfren had been
struggling to gain market share and may
face liquidity problems.
Indonesia’s mobile sector has already seen
a consolidation deal this year with XL Axiata,
which is majority-owned by Malaysian giant
Axiata, closing its US$865m acquisition of
Axis in March.
The bondholders suing Bakrie Telecom
reportedly claim it does not plan to make
interest payments on the notes while it looks
to restructure its debt. The group is alleged
to have missed payments in November 2013

and May 2014, according to reports citing
a lawsuit filed in a US court by Universal
Investments Advisory, Vaquero Master EM
Credit Fund, and Trucharm, which together
hold 25% of the bond.
On 30 May, Fitch downgraded Bakrie
Telecom’s long-term foreign- and localcurrency issuer default ratings to ‘restricted
default’ (RD), following November’s missed
coupon payment.
“Fitch believes that a distressed debt
exchange (DDE) is inevitable, which is likely
to lead to a significant loss for holders of the
US$380m bond,” it said in a note at the time.
FTI Consulting is reportedly advising Bakrie
Telecom on the restructuring.


Alibaba banners and the Chinese flag adorn the New York Stock Exchange building on the day of the firm’s IPO, 19 September

Softbank’s stake in Alibaba
reaches US$75bn
Softbank’s balance sheet was significantly
bolstered by the record-breaking IPO
of Chinese e-commerce giant Alibaba,
in which it holds a 32% stake, in
late September.
Alibaba initially sold 320 million shares,
equivalent to a 13% stake, on the New York
Stock Exchange to raise US$21.8bn. The IPO
became the biggest ever after underwriters
exercised their option to sell a further 48
million shares, taking the total raised to
US$25bn and giving the Chinese group a
market value of almost US$170bn.
On its first day of trading on 19 September,
Alibaba’s stock surged 38% and closed at
US$93.89, valuing Softbank’s 32% stake at
about US$75bn.
The interest is currently worth around
US$71bn after Alibaba’s share price dropped
to US$88.79.
Softbank’s CEO Masayoshi Son, who has
become Japan’s richest man following the IPO,
bought into Alibaba for US$20m in 2000. His

company, the second-largest mobile operator
in Japan, expects a gain of about Y500bn
(US$4.6bn) related to the listing.
Although Son has said Softbank wants to
keep at least 30% of the e-commerce group,
it gives the company more options.

Could eye M&A

The success of the listing is a boost for the
Japanese group, which shelved plans to
merge its US mobile operator Sprint Corp
with rival T-Mobile US in August over
regulatory concerns. A Japanese report
recently quoted an anonymous Softbank

America Movil is
reported to have
contacted Softbank
as it prepares to sell


executive as saying that they “wouldn’t be
surprised if [Son] acquired Vodafone, since
we are no strangers to each other”. Son has
done business with Vodafone before, when
Softbank acquired the telco’s Japanese
business in 2006 for US$15bn.
Another option for Son could be Mexico.
America Movil is reported to have contacted
Softbank as it prepares to sell assets in the
country valued at more than US$17bn to
reduce its market position in light of Mexico’s
antitrust reforms.
Were Son to pursue that option there may
be competition from US incumbent AT&T,
which is “intrigued” by Mexico and Latin
America in general, according to its chief
strategy officer John Stankey. AT&T is also
finalising the acquisition of DTH operator
DirecTV, which has a stake in satellite
TV provider Sky Mexico.
Softbank may also choose to bide its time
and have another run at US consolidation
in 2016 when a new administration will be
installed which may adopt a warmer position
towards in-market consolidation. 31


True and YTP’s joint venture put on ice
Thai telco True Corp’s talks to transform
Myanmar-based ISP Yatanarpon
Teleport (YTP) into a mobile operator
have reportedly been suspended after the
companies failed to reach a deal.
YTP is free to negotiate with other

Consistel eyes
mobile market
Wireless systems designer and installer
Consistel is reportedly set to rival local
ISP MyRepublic to become the country’s
fourth mobile network operator.
Consistel, which also has offices in
Indonesia and the Philippines, has
expressed an interest in competing
alongside existing players SingTel, StarHub
and Axiata’s M1 as an MNO, according to a
local report.
MyRepublic applied in June to become
a new mobile entrant after the country’s
regulator requested feedback on the
allocation of spectrum to enhance mobile
The ISP, in which French billionaire
Xavier Niel invested S$10m (US$8m) in July,
has been a disruptive force in the country’s
broadband sector, offering lower prices than
its competitors.
CEO Malcolm Rodrigues said at the time
that Niel and Sinar Mas-owned Indonesian
telco Sunshine Network became new
shareholders in the company after investing
a total S$30m (US$24m).
The investment was said to be necessary
to fund MyRepublic’s ambitions to provide
mobile services in Singapore and expand to
New Zealand and Australia.

operators now that an exclusivity period
between the two has ended, reported Reuters
citing True CFO Noppadol Dej-Udom.
He reportedly added that his company
still feels its offer is superior and will wait
for YTP to return to it. True revealed it was
negotiating with YTP back in February, and
has said that the Thai operator’s recent sale

of an 18% stake to China Mobile helps give it
the expertise to expand in Southeast Asia.
True CEO Suphachai Chearavanont said:
“The deal is a cornerstone of the company’s
history, heralding a new era for True as it
transforms into an all-powerful leading
convergence telecommunications player in
the region.”

Pamel inks loan
for network rollout
Telecoms infrastructure provider Pan Asia
Majestic Eagle (Pamel) has secured US$85m
in what it describes as Myanmar’s first, nonrecourse, cross-border financing.
The loan facility deal, which will support
Pamel’s rollout of tower site infrastructure
across the country, was arranged by DBS,
ING, OCBC, Standard Chartered and
Sumitomo Mitsui.
Pamel managing director Peter Egbertsen
said the “landmark” deal demonstrates
international banks’ confidence in both the
company and Myanmar.
The company added that the loan will
ensure the development of Myanmar’s mobile
telecoms network continues according to
plan, noting that it also paves the way for the
expansion of commercial bank financing in
the country.
U Than Htun Aung, director of stateowned group Myanmar Posts &
Telecommunications (MPT), said:
“We are very pleased that Pan Asia
Majestic Eagle has been able to secure this

financing as part of their development
of telecommunications infrastructure in
Myanmar and we value the support
they are providing to Myanmar’s
telecommunications network providers
as they implement our vision for a
modern Myanmar.”
MPT was the country’s sole operator as well
as its telecoms regulator before the country’s
first competitive 3G auction last year.
Norway’s Telenor and Qatar-based
Ooredoo were both awarded mobile licences,
while Pamel was established to serve as an
independent provider of passive telecoms
infrastructure to the local sector.
Telenor switched on its network in the city
of Mandalay on 27 September, the first phase
of its planned nationwide rollout.
Coverage is set to be expanded to Nay Pyi
Taw and Yangon imminently, followed by
other cities and regions as more towers
are completed.
Meanwhile, Japanese telco KDDI and
conglomerate Sumitomo Corp recently
announced plans to partner with MPT to
offer mobile services in the country.

MTNL considers parting with UTL
Indian state-owned Mahanagar Telephone Nigam (MTNL) has
reportedly proposed to sell its stake in its Nepalese joint venture
United Telecom (UTL), believing the fixed-line operator is not
commercially viable.
India’s Department of Telecommunications (DoT) is assessing
the proposal, according to Indian media reports.
MTNL reportedly hired SBI Capital Markets earlier this year
to review its 26.68% of UTL. Fellow Indian joint venture
partners Telecommunications Consultants India (TCIL)


and Tata Communications also own more than 26% each of the
Nepalese operator. Local partner Nepal Ventures Private (NVPL)
has a 20% holding.
UTL shareholders decided at a recent meeting to increase UTL’s
authorised share capital to NPR6bn (US$61.6m).
MTNL has decided not to inject any new equity into the
company while Nepal Ventures, a subsidiary of the Vishal
Group, will reportedly pour about NPR450m (US$4.6m) into
the company.
All shareholders other than Nepal Ventures will have the option
to exit the company in about two years, the reports stated.


Court of Appeals delays Globe’s Bayan takeover
Globe Telecom’s acquisition of local
fixed-line telco Bayan is in for more delays,
after being hit with a temporary restraining
order from the country’s Court of Appeals.
Globe has been seeking regulatory
permission to convert more of Bayan’s debt
into equity for about a year, after initially
getting court approval in September 2013
to transform some of it into a 38.3% stake.

It is looking to amass a total stake of
56.6% from converting another chunk of
the Bayan debt it owns.
However, the company said in midOctober that the country’s National
Telecommunications Commission has
been blocked from acting on the deal by
the restraining order, which came after a
petition from incumbent telco PLDT.
“We are eager to see through the
completion of Bayan’s rehabilitation,” said

Froilan Castelo, Globe’s general counsel.
“The telecommunications industry
should not be held hostage by a single
dominant player.”
Ariel Tubayan, Bayan’s head of legal
and regulatory affairs, said the deal is key
to its “corporate rehabilitation”, adding
that the delay hampers the ability of both
companies to ensure the viability of the
indebted telco’s operations, which serve
350,000 customers.

Masayoshi Son, CEO of Softbank,
which has bought DramaFever

Softbank buys Korean
online video service

Softbank has snapped up Korean
streaming video service DramaFever for an
undisclosed sum in the Japanese telco’s latest
acquisition to help it diversify.
The online content provider was reported
in early October to have been put up for
sale for as much as US$140m, attracting
suitors such as US entertainment group AMC
Networks and European broadcaster RTL. It
is also reported to have generated more than
US$20m in revenue last year.
The group, which was founded in 2009

and boasts a library of 700 titles and 15,000
episodes, said in a statement that it has raised
US$12m to date from investors including
Softbank and AMC.
“Having operated as a young independent
company to date, we believe we are
positioned for unprecedented growth with
the benefit of this new strategic partnership,”
said DramaFever co-founder and co-CEO
Suk Park.
Softbank hired Morrison & Foerster for legal
advice on the deal. DramaFever mandated
The Raine Group as financial adviser and
Gunderson Dettmer as legal adviser.

It is the latest in a string of online content
acquisitions for the Japanese telco, which
is looking to branch out from its domestic
market and diversify its portfolio.
The group is reportedly set to lead Indian
online retailer Snapdeal’s impending move
to raise US$600m-US$650m from existing
investors to expand operations, marking
the largest ever investment in India’s
e-commerce sector.
On 3 October, Softbank announced plans
to invest US$250m to create a joint venture
with Legendary Entertainment, the US-based
media giant (see story on page 42). 33


Telenor and Comvik eye Mobifone
Norway’s Telenor and Sweden’s Comvik
International have reportedly confirmed
their interest in becoming strategic investors
in Vietnamese mobile operator Mobifone,
which is tabled for privatisation.
Telenor SVP for group strategy and
portfolio development, Arne Kjetil Lian, told
officials at Vietnam’s Ministry of Information
and Communication (MoIC) that his
company wants to take a controlling stake in
Mobifone and introduce its own services in
the local market, according to a local report
in October.
M A Zaman, CEO of Comvik International
Vietnam, also reportedly told the ministry

True Corp
owner secures
US$440m debt
The largest shareholder of Thai telco True
Corp took out a US$440m term facility to
take part in its recent sale of new shares,
it has emerged.
Privately-held Charoen Pokphand
Holding Company, one of Asia’s largest
conglomerates, secured the debt from
Bangkok Bank and the deal involved
multi-bilateral facilities from other banks,
including Siam Commercial Bank, CIMB
and Maybank.
Proceeds were used to buy shares that True
Corp issued in early September to bring in
state-owned China Mobile as a partner to
help expand across Southeast Asia.
Of the roughly 10.08 billion new shares
that started trading on 9 September, around
5.65 billion went to existing shareholders.
The remaining went to China Mobile, which
paid a total US$882m to amass an 18% stake
in the telco. Charoen’s stake was diluted from
62.47% to 51.3%.
Bangkok Bank was advised on its deal with
Charoen by law firm Norton Rose Fulbright.
Somboon Kitiyansub, the Norton Rose
Fulbright partner that led its team in Bangkok,
said: “The equity raised by True Corporation
will reduce its interest expenses and fund the
rollout of a faster fourth-generation network
with new telecom licences expected to be
opened for bidding in 2015.”
Founded in 1921, Charoen Pokphand
has telecoms, agribusiness, food, retail and
distribution investments in 16 countries, and
claimed US$41bn in revenue for 2013.


his company would like to invest in the
Hanoi-based mobile operator, noting that it
supported the company for several years.
Mobifone’s privatisation has long been
in the pipeline. This April, its former
state-owned parent, Vietnam Posts and
Telecommunications Group (VNPT),
reportedly received approval to spin it
off while holding on to its other mobile
unit Vinaphone.
The MoIC took control of Mobifone in
June and the operator must submit an IPO
plan by the end of the year.
Telenor and Comvik along with
Vodafone, Orange and SingTel have all
opened representative offices in Vietnam
to buy shares once they are released by the

government, earlier local reports stated.
Mobifone’s general director, Le Nam Tra,
declined to comment on which investors
the company may be favouring as talks
are ongoing but was quoted describing its
previous cooperation with Comvik as “a
valuable experience”.
Ho Chi Minh City Securities is reported to
have recently valued Mobifone at US$3.4bn.
In Vietnam’s mobile market Mobifone
and Vinaphone trail Viettel, owned by the
country’s defence ministry. Together the
three operators have a 90% market share.
Overall, the country has six wireless players.
Telenor declined to comment, while
Comvik, Mobifone and the MoIC did not
respond to requests for comment.

Taiwan Mobile
buys into Ambit

Taiwan Mobile has bought a 14.9% stake in
local 4G player Ambit Microsystems and
a 5 MHz chunk of its spectrum for a total
NT6.41bn (US$211.2m).
The telco said its acquisitions will boost the
coverage of both networks, while accelerating
the speed of its 4G service from 100mb/s to
It paid NT$2.98bn (US$97.9m) for the
equity stake and NT$3.433bn (US$113.3m) for
frequencies in the 700 MHz band. The deals
require regulatory approval.
Ambit, which is owned by Taiwanese device
maker Foxconn, bought those frequencies last
October as the group sought to diversify after
its PC and phone manufacturing unit came
under pressure.
It later spent US$387m on a stake in local
mobile operator Asia Pacific Telecom (APT),
which plans to merge with Ambit via a share
swap. APT will be the surviving company in
that merger once it is approved by regulators.
Despite now holding 20 MHz of spectrum
after its Ambit deal, Taiwan Mobile’s
management told investors it still planned to
take part in the country’s 2.6 GHz spectrum
auction next year.

More 4G spectrum to
be auctioned
Taiwan could raise between NT$15bn
(US$494m) and NT$30bn (US$989m) when it

releases more 4G spectrum by Q3 2015, local
officials were quoted as saying.
The National Communications
Commission (NCC) regulator expects six
operators to bid, a spokesperson confirmed.
Taiwan Mobile, Chunghwa Telecom,
Far Eastone Telecom, Asia-Pacific
Telecom, Taiwan Star Cellular and Global
Mobile are all reported to be interested in
participating in the sale.
NCC will auction 190 MHz of airwaves,
which will add to the 270 MHz that was sold
last year for more than US$4bn.
Shih Shih-hao, chair of the NCC, was cited
saying that demand for 4G would reach
1,000 MHz by 2020 and reportedly urged
public agencies which hold a large amount
of bandwidth – including the police and
military – to improve their efficiency so more
spectrum could be distributed to the market.

Its acquisitions will
boost the coverage
of both networks,
while accelerating
the speed of its
4G service from
100mb/s to 140mb/s



Shareholders plan
Link Net stake sale

CVC Capital Partners, First Media and
other shareholders in Indonesian broadband
and cable TV provider Link Net aim to raise
up to Rp8.17trn (US$707.6m) from the sale of a
40% stake in the company.
The book-building process began on 13
October, with selling shareholders offering
about 1.22 billion shares in total at Rp6,200
to Rp6,700 (US$0.54 to US$0.58) per share,
Jakarta-based ISP First Media said in an
exchange filing.
First Media, which has a 41% stake in Link
Net, will sell at least 334.7 million shares, equal
to an 11% stake, and expects to become its
single largest shareholder after the transaction.
London-based private equity firm CVC is
currently Link Net’s largest shareholder with a
49% stake held via subsidiary Asia Link Dewa.
Brokerage firm OCBC Securities has a 7% stake.
The shares will be sold via a private
placement. Nine cornerstone investors,
including US fund managers BlackRock and

Och-Ziff Capital Management, have already
pledged US$257m in commitments, one news
agency cited a source with direct knowledge of
the matter as saying.
Goldman Sachs Investment Strategies,
Malaysian investment firm CMY Capital,
Neuberger Berman, William Blair, Morgan
Stanley Investment Management and
Columbia Wanger Asset Management are also
reportedly among those who have agreed to
buy shares.
Goldman Sachs and Credit Suisse are
reportedly the global coordinators for the sale,
while CIMB, Ciptadana Securities, BNP Paribas
and Deutsche Bank are also reportedly working
on the transaction.
Link Net, which first listed on the Indonesian
Stock Exchange in June, has a market
capitalisation of Rp21.6trn (US$1.89bn).
CVC describes Link Net as the second-largest
fixed broadband and cable TV operator in
Indonesia with a network passing more than
500,000 homes across Greater Jakarta, Surabaya
and Bali.

considers sale
of local unit
Etisalat is reportedly looking to sell its
Sri Lankan mobile operations.
The UAE-based telecoms group is in
early-stage discussions with a number of
international bidders, including India’s
largest telco Bharti Airtel, according to
Arabian Business citing a source close to
the UAE company.
The state-owned operator launched
services in Sri Lanka in 2010 after
acquiring Milicom’s local subsidiary for
around US$155m. It currently ranks
third among the country’s five mobile
operators, while Bharti is the smallest
In August last year, media reports had
already suggested that Bharti was in
advanced discussions with Etisalat for
a potential merger of their Sri Lankan
Etisalat runs operations in 19 countries
in the Middle East, Africa and Asia and
has a market cap of approximately
AED91bn (US$24.7bn). 35


Oi’s Bava quits as deal rumours gain momentum,
France’s Iliad gives up on T-Mobile US, and FCC puts
Comcast-TWC merger review on ice

Telefonica strikes €7.2bn
deal to acquire GVT
Telco says merger will create Brazil’s largest integrated player
Telefonica has agreed a €7.24bn (US$9.3bn)
cash-and-stock deal to buy French
conglomerate Vivendi’s Brazilian broadband
unit GVT, bolstering its already strong
position in the local market.
The Spanish telecoms giant will pay
Vivendi €4.66bn (US$6bn) in cash, from
which about €450m in debt and other
obligations will be deducted.
Vivendi will also receive a 7.4% stake
in leading mobile player Telefonica Brasil
(Vivo), valued at €2.02bn, and a 5.7% stake
in Telecom Italia (TI), valued at €1.01bn. The
5.7% TI stake represents 8.3% of the Italian
incumbent’s voting capital.
Vivendi will be liable for a tax payment of
about €500m.
The deal marks the sale of its last majority
stake in a telecoms company, completing
its transformation into a pure-play media
company. Earlier this year, Vivendi sold its
interest in Maroc Telecom and agreed to part
with French mobile operator SFR.
The GVT transaction, which is subject to
the approval of Brazilian authorities including
Anatel and Cade, came a few weeks after
Vivendi opted to enter exclusive talks with

Telefonica, picking its bid over a €7bn offer
from TI.
The companies expect the deal to close by
the end of the first half of 2015.
As previously announced, Telefonica will
fund the cash component of the transaction
with a capital increase at its Brazilian mobile
unit Vivo. The Madrid-based telco will
subscribe to this to keep its current 74% stake,

The transaction
allows Telefonica
to enhance its
positioning in one
of its key markets
and improve its
growth profile and
financial flexibility


funding this, in turn, with a capital increase at
group level.
Reiterating that the acquisition will
generate at least €4.7bn (US$6.05bn) in
synergies, Telefonica said the combined
Brazilian unit will be the country’s largest
integrated telecoms operator, leading both
the mobile and broadband segments.
“The transaction allows Telefonica to
enhance its positioning in one of its key
markets and improve its growth profile and
financial flexibility,” the telco said.
The acquisition of GVT, which owns a newgeneration network passing more than 10.4
million homes in 21 Brazilian states, should
enable Telefonica to better compete with local
rivals America Movil and Oi in the broadband
The deal will expand Telefonica’s footprint
outside the largest city of Sao Paulo, where
the majority of GVT’s 2.5 million broadband
customers reside.
The Brazilian telecoms market looks likely
to see more M&A activity in the not-toodistant future, with speculation mounting
over what TI will decide to do with its
Brazilian unit, TIM Brasil, the country’s
second-largest mobile operator after Oi said it
was considering a bid for its larger rival.

Telecom Italia will review unit sale

Telecom Italia (TI) is to discuss with investment fund Fintech
possible changes to the November 2013 agreement for the sale of
its controlling stake in Telecom Argentina.
The Italian incumbent’s management board, which held a
meeting on 26 September to discuss the US$960m deal, said
the new negotiations with Fintech will take into account the


delay in obtaining regulatory approvals and include some
guarantees for TI. The sale agreement is now valid until 24 October
after being postponed several times.
The company agreed to sell its Argentine operations to Fintech,
owned by Mexican billionaire David Martinez, almost a year
ago but the local regulator has yet to approve the deal. In early
September, the company reportedly said it could not indefinitely
put off the sale and that it may reconsider its plans for the unit.


Oi CEO Bava resigns
amid deal rumours
Telco says Brazilian merger would help speed up recovery

Zeinal Bava, the CEO of Brazilian telco Oi,
stepped down with immediate effect on
7 October.
Oi, which is in the process of merging
with Portugal Telecom (PT), said the
company’s current CFO, Bayard De Paoli
Gontijo, will take on the role of interim
CEO until a replacement is appointed.
The company did not elaborate on the
reason for Bava’s departure and declined
to comment further.
Former PT CEO Bava, who was appointed
as head of the Brazil-based combined
business in June 2013, has been instrumental
in facilitating the merger which was first
agreed in October last year.
In early September, Oi and PT revised
the terms of their combination, following
Rioforte’s default on a €847m (US$1.1bn)
debt payment to the Portuguese operator
which forced it to reduce its stake in the
combined entity from 37.4% to 25.6%.
The default also prompted Bava’s successor
at PT, Henrique Granadeiro, to resign at the
beginning of August.
Some analysts have suggested that with
the departure of Bava, the combination could
now be undone, enabling national champion
Oi to focus solely on Brazil.
In addition, it is understood that
Luxembourg-based telecoms holding Altice
has been negotiating the acquisition of
Oi’s Portuguese operations and has hired
Goldman Sachs and Morgan Stanley to
advise it on a bid.
In a securities filing, Oi responded to
market speculations saying it has not taken
any decision regarding the sale of PT and has
not received an offer for the asset.
Gontijo was subsequently quoted as
saying that Oi was not looking to unravel its
merger with PT, although it could sell some
Portuguese assets (see story on page 8).
Bava’s departure comes at a critical
time for the highly-leveraged Brazilian
operator, which is trying to dispose of
non-core assets, including Africatel, to
reduce its R$46bn debt (US$19bn) and
improve liquidity.

Former Oi CEO
Zeinal Bava

Gontijo reportedly said that a merger with
a Brazilian rival would speed up
Oi’s financial recovery, referring to the fact
that the company hired BTG Pactual in
August to evaluate a potential acquisition
of the country’s second-largest operator,
TIM Brasil.
Analysts have been sceptical about whether
it would be able to finance such a large deal
without America Movil’s Claro, which has
expressed interest in a joint bid. A sale of
the Portuguese operations or of some assets
would give Oi much-needed cash to finance
a potential acquisition. Meanwhile, Telecom
Italia-controlled TIM has hired local bank
Banco Bradesco to review its strategic
options. In a securities filing, TIM however
dismissing media reports suggesting that
Bradesco was specifically hired to work on

The Brazilian
government believes
there is too little
competition and
has long wanted a
fifth operator


a bid for Oi. Telecom Italia CEO Marco
Patuano was later quoted as saying that
the company is open to opportunities in
Brazil but was in no rush to seal any M&A
deal and described a potential bid for Oi as
He, however, reiterated that TIM is not
up for sale. TI is reportedly looking to invest
€750m over the next three years in the
country for network upgrades.
Carlos Winzer, senior VP at rating agency
Moody’s, recently told TelecomFinance
that Oi would need to upgrade its existing
infrastructure and invest more in the
network, as well as reduce operating expenses
and improve margins, if it wanted to stay
competitive in the wake of the Telefonica-GVT
deal (see story on page 36).
Commenting on the potential for any
consolidation deals in the Brazilian market,
Wally Swain, senior vice president at research
firm Yankee Group said: “The Brazilian
government, as many governments, believes
there is too little competition in Brazil and so
has long wanted a fifth operator.
“The recent spectrum auction may have
shown it that a new player is unlikely but
since they are somewhat trapped in their own
rhetoric about industry structure, they will
still resist/block consolidation.”
Swain believes that the only scenario that
might gain approval would be one whereby −
whoever the buyer or seller might be − a large
degree of control remained with Oi. 37


T4U delays Digicel closes Telstar deal
initial public


Towerco T4U has reportedly postponed the
pricing of its planned IPO for a month due to
concerns over the outcome of the country’s
presidential election.
Pricing of the R$500m (US$207m) listing
was expected on 16 October, but a drop in
Brazilian equity and currency markets in
September weakened sentiment ahead of
investor meetings, a newswire reported citing
two sources with direct knowledge of the deal.
Bank of America Merrill Lynch, Itau BBA,
UBS and Citigroup have been mandated to
advise T4U, which is owned by Israeli holding
company Fishman Group, on the deal.
The first round of Brazil’s general elections
was held on 5 October. Since no candidate
gained an over 50% majority, a second-round
runoff will be held on 26 October, when
current president Dilma Rousseff from the
Workers’ Party will compete against Aecio
Neves of the Brazilian Social Democracy Party.
Investors are reported to be concerned
about election-related risks, including
reduced liquidity and an economic recession.
In August, the Sao Paulo-based towerco
filed a prospectus with Brazil’s securities
regulator CVM saying it would conduct a
primary and secondary public offering of
shares. The prospectus did not mention the
number and price of shares to be offered nor
the timeframe for the IPO.
T4U’s IPO comes at a time when rising
demand for high-speed internet has fuelled
growth in the Brazilian tower segment,
prompting many mobile carriers to sell and
lease back their towers in a bid to cut costs.
In June, American Tower acquired BR
Towers, which operates more than 4,000
sites nationally, for almost US$1bn to
expand its presence across the country.
Later in the month, SBA Communications
bought 1,641 towers from local mobile
operator Oi for US$530m.

Jamaica-based telecoms group Digicel
has completed the acquisition of local
triple-play operator Telstar for an
undisclosed sum.
The acquisition, which is the company’s
fourth Caribbean cable deal in recent
months, will enable Digicel to expand its
network coverage and service offering
across Jamaica.
In April, Digicel bought WIV Cable TV in
the Turks and Caicos Islands and its sister

company, broadband provider TCT, while
in February it sealed the purchase of SAT
Telecommunications, which provides TV,
telephony and broadband internet services
to customers in Dominica.
Last November, the company
also acquired Caribbean Cable
Communications Holding, a cable TV and
ISP in Anguilla, Nevis and Montserrat.
Founded in 2001, Digicel Group operates
in 32 markets in the Caribbean, Central
America and Asia Pacific, providing
services to about 13 million subscribers.

Telcos spend US$2.4bn
in 4G auction

America Movil’s Claro, Telecom Italia’s TIM
Brasil, Telefonica’s Vivo and regional player
Algar Telecom have all secured frequencies
in Brazil’s 700 MHz national spectrum
auction, which was held on 30 September
in Brasilia.
Claro was awarded the first nationwide 4G
licence with a bid of R$1.95bn (US$795m),
TIM also offered R$1.95bn for the second
lot while Vivo secured spectrum with a bid
of R$1.93bn (US$787m). Algar received
frequencies covering only certain Brazilian
cities with a bid of R$29.6m (US$12m).
The total amount spent by the operators,
R$5.8bn (US$2.4bn), is well below the R$8bn
(US$3.3bn) the Brazilian government had
reportedly hoped to raise.
The regulator did not receive any offers for
two remaining lots. Neither Oi nor Nextel
Brasil took part, as both operators are
focused on addressing their balance sheets.
Anatel initially tendered 4G-suitable
spectrum in 2012 when it sold licences in the
2.5 GHz band. However, 700 MHz licences are
particularly desirable to operators as a wider

area can be covered with fewer base stations
in comparison to higher frequencies.
Justifying its decision not to take part in the
auction, Oi said it already has a diversified
spectrum portfolio and would instead invest
in improving its current mobile, fixed-line,
broadband, and pay-TV services “under a
national multi-product and convergence
It added that in terms of 4G services, it
has 2.5 GHz spectrum to serve its clients
and meet its coverage obligations through
2017, and that it may utilise 1.8 GHz spectrum
in the future.
In its Q2 results released in August, Oi
disclosed net debt of R$46bn (US$19bn)
which has been downgraded to junk status by
the ratings agencies. Its first set of quarterly
results since it acquired Portugal Telecom’s
assets saw it record a R$221m (US$92m) loss.
Meanwhile Nextel Brasil’s parent, USbased NII Holdings, filed for bankruptcy in
September. In spite of the financial strains,
NII plans to hold on to its Brazilian subsidiary.
Nextel is hoping regulators will allow it to use
its 800 MHz spectrum – which it currently
utilises for trunking – to offer 4G services.

Four interested in spectrum auction
Leading mobile operators Claro, Movistar
and Personal, as well as potential new
entrant Arlink, are looking to take part in
the country’s 4G spectrum auction, scheduled
for 31 October.
National telecoms regulator Secom will grant
concessions for nationwide 4G frequencies
in the AWS and 700 MHz bands, as well as


remaining 3G spectrum in the 1,900 MHz and
850 MHz bands.
Arlink, which is a subsidiary of multimedia
conglomerate Grupo Uno, is looking to secure
spectrum in the tender to reportedly offer
quadruple-play services.
Argentina’s fourth largest operator,
Nextel, will not take part in the bid.
The company might soon be sold after
its parent company, troubled US-based

NII Holdings, filed for Chapter 11 bankruptcy
protection in August.
Fucata, a joint venture led by Argentine
media conglomerate Grupo Veintitres, is
reportedly looking to acquire the operator
before the end of October.
According to local media reports, Nextel
Argentina is the only Nextel subsidiary which
still does not have 3G technology, making it
less attractive for investors.


On Telecom secures IFC financing

The International Finance Corporation (IFC) will invest
US$97.5m into On Telecom to support the Brazilian broadband
operator in increasing its network coverage to underserved areas.
The World Bank’s private investment arm joins On Telecom’s
existing investors Zaki Rakib, Fares Nassar and George Soros’
Quantum Strategic Partners.
The financing consists of US$27.5m in equity and a loan of up to
US$70m, US$40m of which will be through syndicated loans.
Explaining its investment, the IFC said that according to World

Bank research, every 10% increase in penetration of broadband
services results in a 1.3% increase in economic growth.
On Telecom began operating in March 2013 and offers
broadband in rural areas of Sao Paulo state through 4G and a
fledgling fibre network.
Aniko Szigetvari, head of telecoms, media and technology for
IFC in Latin America and Africa, commented: “Our investment
in On Telecom plays an important role in IFC’s strategy to help
address Brazil’s infrastructure bottlenecks and unlock the
innovation and efficiency gains that are created by increased
internet access”.

VimpelCom exits
Wind Mobile

Telecoms group VimpelCom and its
subsidiary Global Telecom Holding (GTH)
have agreed to sell their stake in Canadian
mobile operator Wind Mobile to its
controlling shareholder Globalive Capital.
Owned by Wind Mobile CEO Anthony
Lacavera, Globalive will buy the stake
together with some investment funds for
C$135m (US$122.4m).
The funds reportedly are West Face Capital,
Tennenbaum Capital Partners, LG Capital
Investors, Novus Wireless Communications
and Serruya Private Equity.
The buyers will also acquire C$160m
(US$145m) of outstanding debt, consisting
of vendor financing, a VimpelCom
spokesman said.
He added that VimpelCom and GTH will
be released from all obligations in
connection with the vendor loans.
Cairo-based GTH, formerly Orascom
Telecom, financed Globalive when it first
acquired spectrum in 2008. VimpelCom
continued to fund the operator after it took a
majority stake in the Egyptian group in 2011.
Lacavera currently holds an indirect 67%
voting interest and 34.3% equity interest in
Wind via Globalive Capital, formerly AAL
Holdings. The rest is owned by VimpelCom
via GTH.
Commenting on the deal rationale, the
VimpelCom spokesman said: “Since we
didn’t achieve any agreement concerning our
operational control in Wind Mobile with the
Canadian government we decided to leave
this market.”
VimpelCom has been trying to divest its
stake in Wind Mobile ever since its failed
attempt to take full control of the operator
in June 2013.

The deal, first announced in January 2013,
reportedly collapsed on security grounds.
Canadian officials were allegedly concerned
about Wind’s network, built by China’s
Huawei, being controlled by partly Russianowned VimpelCom.
VimpelCom has since written off the value
of its Wind investment.
A report in late July suggested that US
investment firm Providence Equity Partners
was examining the possibility of acquiring a
stake in Wind.
Separately, Canadian media group
Quebecor has reportedly been considering
merging its Videotron mobile unit with either
Wind Mobile or Mobilicity in a bid to scale up
its operations across the country.
These rumoured interests and Wind’s
buyout follow the Canadian government’s
surprise announcement this summer that
it would fast-track the auction of AWS-3
spectrum set to be held in March 2015.
The rules of the auction strongly favour
smaller operators such as Wind because
a 30 MHz block will be set aside, and only
operators with less than 10% of national
market share and 20% regional share will be
eligible to bid for it.
The structure is designed to turn Wind and
struggling Mobilicity into viable investments,
and create an incentive for buyers that have
been considering investing in the operators.
Wind Mobile is Canada’s fourth largest
carrier, although the top three mobile
operators – Rogers Communications,
BCE and Telus – hold a combined 90%
market share.
The government has made it clear that the
three players will not be allowed to acquire
the smaller operators. Instead, it has been
attempting to nurture the creation of a fourth
national player.

Cogeco assesses
wireless entry

Montreal-based cableco Cogeco will consider
launching MVNO services if the national
regulator guarantees it wholesale access to the
The listed company submitted its proposal
at a public hearing held by the Canadian
Radio-television and Telecommunications
Commission (CRTC) on 29 September.
“Given the high concentration in the
Canadian mobile wireless market, Cogeco
strongly believes that regulatory measures
fostering the entry of MVNOs in addition to
other measures will increase competition in
the market and enhance consumer choice,”
Cogeco CEO Louis Audet said in a statement
at the time.
The Canadian government has advocated
the entry of a fourth national operator in
the sector, which is currently dominated by
Roger, Bell and Telus with a combined 90%
market share.
In this context, CRTC is undertaking a
review aimed at assessing the competitiveness
of the wholesale mobile wireless services
market and identifying potential regulatory
changes that would be required.
Cogeco argues that the entry of MVNOs
in the market would contribute to increase
investments in the telecoms industry.
The cableco would only consider launching
wireless services if there was an enforceable
order to ensure it access to the infrastructure
of its much larger rivals, and if the rates at
which this access was provided were dictated
by the regulator, said Audet on a conference
call. The French Canadian company has, over
the past few months, been focusing on debt
reduction following the acquisitions of Peer 1
Network Enterprises and Atlantic Broadband
in 2012.
It has around C$2.8bn (US$2.5bn) in longterm debt, according to its latest quarterly
results published in June. It generated
C$496m (US$446m) in revenues and EBITDA
of C$229m (US$206m). 39


America Movil
looks to offload
US$17.5bn assets
Carlos Slim’s telecoms giant America
Movil (AMX) is reportedly holding talks
with potential bidders to discuss the
sale of US$17.5bn worth of assets in
the country.
America Movil, which controls 70%
of the Mexican mobile market and 80%
of the fixed-line segment, is required to
sell some assets in the country to lower
its market share in compliance with
changes to the country’s telecoms laws.
The company is also planning to
spin off its tower portfolio, according
to reports.
AMX assets could be priced at five to
seven times EBITDA of US$2.5bn, which
would imply a value of up to US$17.5bn.
Potential suitors include US telco
AT&T, Japan’s Softbank, Bell Canada
and China Mobile, reports noted.
AT&T chief strategy officer John
Stankey was quoted saying during a
September investor conference that the
company is “intrigued” by Mexico and
Latin America in general, and would not
rule out carrying out other acquisitions
while it finalises the US$48.5bn takeover
of pan-American DTH operator
Following the media reports, Mexican
telecoms regulator Ifetel confirmed
that it held talks with Stankey in early
September to discuss the market
outlook of the market, as the company
evaluates potential investments in
the region.
An acquisition of AMX assets would
only have a modest credit impact for
AT&T, according to Fitch Ratings.
Jose Otero, president of Signals
Telecom Consulting, said he would not
expect any major regulatory hurdles to a
potential deal but, depending on which
assets are acquired, the government
could decide to impose obligations to
the US operator such as rural coverage.
Rick Mattila, executive director
at Mitsubishi UFJ, said a larger than
anticipated sale would be positive
for America Movil’s credit and
expected proceeds to be invested in
Brazil for instance.
He added that, for AT&T, it would be a
medium-sized deal which it could fund
fairly easily.
In his view, Spain’s Telefonica could
also be interested in the assets.


Government kick-starts
mobile network project


Telecoms regulator IFT and the telecoms
and transport ministry have agreed on the
terms and conditions for developing
a state-owned mobile network by 2018.
Six telecoms equipment manufacturers
are carrying out field studies for the publicprivate partnership (PPP), which is aimed
at loosening America Movil’s grip on the
country’s telecoms market and will require
an investment of US$10bn over the next 10
years. In September, it was reported that
vendors Alcatel-Lucent and Ericsson had
contributed to drafting the proposal.
The World Bank’s International Finance
Corp (IFC) is helping bidders identify a
strategic partner, a spokeswoman said at
the time. She added that IFC had also been
mandated to scout for a lead arranger which
would put together the financing package.
The spokeswoman said: “IFC’s engagement

in this project is part of our strategy to
support a competitive telecoms sector
in Mexico and to help expand access to
affordable, high quality telecoms services in
the country,.”
Earlier this year, local media named
Alcatel, Cisco, Ericsson, Huawei and Intel
among potential candidates to build the
China Development Bank and other
Chinese state-owned banks were reportedly
holding discussions with Mexico about
financing the network.
The government is expected to announce
a successful bidder by mid-2015 while the
project is scheduled to complete by the end
of 2018, according to reports.
The winners would supply the network
equipment as well as manage the network,
which would be used by MVNOs as well as
Telefonica and Iusacell, Mexico’s second and
third largest players, respectively.

BCE closes in on
Aliant privatisation

Telecoms giant Bell Canada Enterprises
(BCE) has successfully completed its offer
to purchase all the issued and outstanding
common shares of fibre operator Bell Aliant
and to exchange all its preferred shares.
According to the depository agent for the
offer, CST Trust Company, more than 90% of
the publicly-held Bell Aliant common shares
were validly tendered on 2 October. The
company acquired the balance on 7 October
through a compulsory acquisition.
As a result of the privatisation process,
the fibre operator will cease operating as
a publicly-traded company and will be
integrated into BCE’s national operations.
BCE has offered Bell Aliant shareholders the
choice of C$31 in cash for each of their shares,
0.6371 of a BCE share, or C$7.75 in cash and
0.4778 of a BCE share. The offer represented
an 11.6% premium on Aliant’s 20-day volume
weighted average price of C$27.78.
BCE initially announced that it had agreed
a deal to buy out the public shareholders in
Bell Aliant for around C$3.95bn (US$3.68bn)
in late July. BCE already owned 44% of the
fibre operator and has exercised managing

control of the business.
Founded in 1999, Aliant operates
throughout Eastern Canada offering
broadband, fixed-line telephony and IPTV
To finance the privatisation, BCE used
available sources of liquidity to fund the cash
portion of the consideration and issued up to
61 million new common shares for the equity

C$1.25bn bond issue

Meanwhile, Bell Canada has offered C$1.25bn
(US$1.12bn) worth of medium term notes
in two series under its existing MTN
About C$1bn of the net proceeds were used
by its parent BCE for the Aliant privatisation.
The financing was split between C$750m
worth of 3.15% notes, which were priced at
99.602 and will mature in September 2021,
and a C$500m 4.75% bond, which was priced
at 99.099 and is due in September 2044.
The lead bookrunners were CIBC, TD and
National Bank. The other syndicate members
included BMO, RBC, Scotia, Desjardins, Bank
of America Merrill Lynch, Barclays, Citibank
and Casgrain.


Overseas investors
looking at Hondutel
The government has held talks with a
consortium of international investors to
discuss investments in Honduras’ stateowned fixed line operator Empresa
Hondurena de Telecomunicaciones
Rodolfo Irias Navas, the president
of the country’s telecoms commission,
was reported as saying that he met
representatives from Israeli, Costa Rican,
Uruguayan, Chinese and US companies,
which showed an interest in acquiring
Hondutel shares and requested further
information on its operations.

Separately, Ricardo Cardona, head of
the national regulator Conatel, reportedly
said in late September that Costa Rica’s
Instituto Costarricense de Electricidad
(ICE) and Spanish telecoms giant
Telefonica were interested in carrying out
investments in Hondutel.
Hondutel managed to curb its 1H losses
by 55.7% year-on-year, reporting a deficit
of HNL134.06m (US$6.3m) in the six
months to 30 June 2014 against a loss of
HNL302.6 (US$14.3m) in the first semester
of 2013.
In June 2014, it generated a net profit
of HNL13.6m (US$643,000), after 41
consecutive months of losses.

Telefonica eyes
alliance with

Spanish incumbent Telefonica is reportedly
reviewing a number of partnership options
with Mexican broadcaster Televisa.
These could include setting up a new
telco in Mexico for the provision of
quad-play services, creating an MVNO on
Telefonica’s Mexican network, or a tie-up with
Televisa’s cable companies, according to a
newswire report.
The two companies have reportedly not
held formal discussions yet, as Telefonica is
also assessing a potential takeover of number
three carrier Iusacell, which was recently
bought out by Mexican billionaire Ricardo
Salinas’ Grupo Salinas.
Earlier this year, a number of press
reports hinted at a possible merger between
Iusacell and Telefonica, which is Mexico’s
second-largest mobile operator. At the end
of July, the Spanish incumbent confirmed
it was negotiating a deal in Mexico, without
revealing the name of the company.
But in early September, Salinas agreed
to acquire the remaining 50% stake in
Iusacell he did not already own from
Televisa for US$717m. At the time,
however, the Mexican billionaire said

he was in the process of selecting a
“world-class strategic partner” to
boost Iusacell’s growth and expand
its product offering.

Softbank looking
at Iusacell
Meanwhile, Japanese company Softbank is
rumoured to also be interested in investing
in Iusacell.
The Tokyo-based carrier, which already
has a roaming agreement with the Mexican
operator, is reportedly in advanced stages
of reviewing the operator’s assets.
Softbank, which recently abandoned
plans to merge its US operator Sprint
with rival T-Mobile US, has been linked
to several potential targets, including
UK-based Vodafone and America Movil’s
Mexican assets.
Mexico’s telecoms sector is currently
experiencing a shake-up. Earlier this year,
President Enrique Pena Nieto pushed
forward new legislation aimed at promoting
a more competitive environment by reducing
America Movil’s dominant position in the
domestic market.

judge raises
spectre of
The owners of US satellite/terrestrial venture
LightSquared and its creditors have been
ordered to resume mediation talks to agree
a restructuring deal for the spectrum-rich
business, which has been in Chapter 11
bankruptcy since May 2012.
Judge Shelley Chapman told the parties
to get around the table and raised the
prospect of converting the case to a Chapter
7 liquidation if an agreement could not be
reached, according to an early October report.
In response, LightSquared’s lawyers asked
for more time to find a settlement. They
reportedly said the company still had valuable
assets and hundreds of jobs were on the line.
The court has pushed back the bankruptcy
confirmation hearings from 20 October to 10
November, and Judge Chapman has directed
the stakeholders to find a broad consensus.
The judge dismissed a restructuring plan
hatched by LightSquared’s hedge fund owner
Harbinger Capital Partners and two
creditors – Mast Capital and JP Morgan –
in August which would have handed some
of the venture’s spectrum to creditors.
Harbinger said its plan would inject
new money for the assets of LightSquared
Inc, which holds a smaller swathe of
spectrum than the company’s main
LightSquared LP unit.
It would involve US$460m in new DIP
financing, of which roughly US$360m
would be converted into exit financing, and
US$100m in revolving exit financing.
It would also see the issuance of new debt
and equity instruments to wipe out Inc’s
existing claims.
Judge Chapman said she would look at the
breakaway plan in the confirmation hearings
but described it as an attempt to “hijack” the
case, the report said.
LightSquared’s Chapter 11 process had
at one point managed to whittle down
competing restructuring proposals to just one,
but this was thrown out once it was put to
Chapman because it was unfair on satellite TV
magnate Charlie Ergen, who owns the largest
proportion of LightSquared debt through his
SPSO vehicle.
LightSquared filed for voluntary
reorganisation back in May 2012 after its
spectrum was found to interfere with
GPS technology.
The company is still talking with regulators
for a way around this issue. 41


Verizon picks adviser for assets sale
Verizon Communications has reportedly hired TAP Advisors
to assist in the sale of its network’s assets including its
mobile towers.
In September, CFO Fran Shammo was quoted as saying that the
US’ largest carrier could offload some of its network assets and
that the idea had been inspired by AT&T’s US$4.85bn sale of some
of its towers to Crown Castle last year.
Verizon CEO Lowell McAdam had also reportedly said, a few
months back, that the company would be open to selling some
of its towers at the right price, adding that the US incumbent had

received preliminary offers at inadequate valuations two years
ago. Reports have suggested that a sale of Verizon’s towers could
fetch around US$6bn.
The asset package to be sold could reportedly be announced
before the end of the year and would include about 12,000 towers.
Verizon has a substantial debt load since its acquisition of
Vodafone’s 45% stake in Verizon Wireless for US$130bn earlier
this year.
TAP Advisors was mandated by sellers in two major US
tower deals recently: AT&T’s US$4.85bn sale of more than
9,000 towers; and T-Mobile US’ sale of 7,200 towers, also to Crown
Castle, for US$2.4bn in December 2012.

Iliad drops T-Mobile plans

Telecoms group Iliad has scrapped plans to
acquire Deutsche Telekom (DT)-controlled
T-Mobile US.
The owner of low-cost operator French Free
Mobile said its decision came after DT and
T-Mobile board members turned down its
improved offer.
At the end of July, Iliad, which is owned
by French tycoon Xavier Niel, submitted an
opportunistic US$33 per share cash offer for a
56.6% stake in T-Mobile US.
However, the offer was deemed insufficient
by DT, which holds 67% of T-Mobile, and
therefore rejected. The initial bid came as the
US’ third-largest operator, Softbank-owned
Sprint, shelved its plans to take over its rival
over regulatory concerns.
In September, Iliad teamed up with two
private equity funds and international banks,
which reportedly included KKR, to draft an
improved bid for the US operator. Under its

new offer, it was willing to acquire 67% of the
company for US$36 per share including cost
savings. According to Berenberg research
estimates, that equated to a US$33.8 per share
Iliad, which had set a mid-October
deadline to decide on its T-Mobile US bid,
said the improved offer would have fitted into
the group’s strict financial policy in terms of
indebtedness and dilution.
It would also have accelerated T-Mobile US’
transformation, providing more than US$2bn
in annual cost savings, the company claimed.
DT was reportedly concerned about Iliad’s
not having a track record in the country. In
a recent e-mailed statement, DT reiterated
that the company was open to transaction
opportunities but that any deal would need
to add more value to T-Mobile shareholders
than a stand-alone case.
Iliad’s failed bid for T-Mobile has fuelled
speculation that DT might now focus its
efforts on negotiating a deal with US DTH

provider Dish Network, which has openly
expressed an interest in a tie-up with the US’
fourth-largest operator. A source familiar with
DT’s thinking was quoted as saying that the
German incumbent may also be tempted to
remain in the US market for a bit longer as the
company is still growing.
Iliad said it would continue its profitable
growth policy but did not disclose whether
it would continue to pursue M&A
opportunities in the US or would be focusing
on domestic growth.
According to Berenberg analyst Wassil
El Hebil, the T-Mobile US bid withdrawal
will likely encourage Iliad to accelerate
consolidation in the French market with a
potential bid for rival Bouygues Telecom,
France’s third-largest mobile player.
“If Iliad pays €8bn to acquire Bouygues
Telecom, the deal would remain accretive to
its shareholders – without taking into account
the possible upside from market repair”, he
wrote in a note.

Softbank invests in Legendary
Japanese telecoms group Softbank has
injected US$250m in California-based
media production company Legendary
The two companies will also enter a joint
venture agreement to maximise Legendary’s
intellectual property rights, including in
television, digital, licensing and merchandising
across various over-the-top/mobile platforms
with a particular focus on China and India.
The investment is expected to close in
October, subject to certain conditions, the
Japanese company said.
Further to the agreement, Nikesh Arora, the
newly-appointed CEO of Softbank Internet and


Media (SIMI), will join Legendary’s board of
Commenting on the deal, he said: “Our goal
at SIMI is to leverage Softbank’s international
platform and network of internet and media
partners to accelerate content creators’ digital
strategies and extend their global reach.
Softbank hired The Raine Group as financial
adviser, while Morrison & Foerster acted as
its legal adviser. Martin Willhite, Legendary’s
COO and general counsel, represented the
US company and O’Melveny & Myers acted as
outside legal adviser.
Ever since Softbank abandoned plans to
merge its US mobile unit Sprint with rival

T-Mobile US a few months ago, the Japanese
group has been associated with a number of
potential targets.
A week before the Legendary Investment,
media reports suggested that the company,
which is controlled by CEO Masayoshi Son,
was negotiating a US$3.4bn acquisition of US
animation studio DreamWorks Animation.
Later reports said the deal talks had cooled.
In September, Softbank booked a US$4.6bn
gain following the IPO of Chinese e-commerce
company Alibaba, in which it has kept a 32%
stake. In 2000, the telco had invested US$20m in
Alibaba. Its holding is now valued at more than
US$70bn (see page 31).


Dish to bid in November auction
The US’ largest mobile carrier, Verizon
Communications, along with smaller
rivals AT&T and T-Mobile US and satellite
provider Dish Network have submitted
initial applications to take part in the country’s
upcoming spectrum auction.
The FCC has received 80 applications for the
AWS-3 frequency tender, which is due to take
place on 13 November, although only 33 entities
submitted complete forms.
In July, the telecoms regulator said it expected
to raise at least US$10.65bn from the auction,
which will offer 1,614 licences in the 1,6951,710 MHz, 1,755-1,780 MHz and 2,155-2,180
MHz bands. Dish has disclosed joint bidding

arrangements with Northstar Wireless and SNR
Wireless LicenseCo, in both of which it holds an
indirect interest.
A T-Mobile spokeswoman said the company
has not made any joint bid, while Verizon said
it could not comment on any auction-related
matters. AT&T did not respond to an enquiry on
potential joint bids.
A mock auction will be held on 10 November.
Interested parties had to make an upfront
payment by 15 October to become qualified
Analysts at New Street Research said in a
note that, although the number of bidders is
lower than in the previous AWS-1 and 700 MHz
auctions, the entities are sufficiently large and
well-funded to make the auction competitive,

adding that their need for spectrum is far more
acute now than it was before.
The 2008 700 MHz auction, which was the
last auction of comparable spectrum, generated
Sprint Corp has not applied to take part
in the process. A Sprint spokesman said the
company had decided against participating in
the tender but would evaluate opportunities
presented by the 600 MHz incentive auction,
planned for mid-2015.
In August, the FCC proposed preventing
the nation’s largest operators from
making joint bids in the 600 MHz auction,
prompting Sprint to abandon merger
plans with smaller rival T-Mobile US over
regulatory concerns.

TWC-Comcast deal review on ice
Comcast fires back at merger opponents

US telecoms regulator FCC has paused its
self-imposed 180-day shot clock for the
review of the planned US$45bn merger
between US cablecos Comcast and Time
Warner Cable (TWC) until 29 October.
The deadline extension will give the public
and shareholders more time to comment on
the proposed deal, in response to a request
from satellite provider Dish Network.
It also enables the regulator to determine
whether it is satisfied with Comcast’s and
TWC’s responses to requests for additional
information, the FCC said.
The previous deadline to file replies to
responses and oppositions to the deal had
been set for 8 October and the FCC had
originally expected to make a final ruling on
the merger on or around 6 January.
In late August, the regulator, which is
working on new net neutrality rules, asked
for additional details about the deal and the
cablecos’ operations, including queries about
their broadband businesses, competitors in
the segment and traffic management tools.
In the October statement, the FCC said that
the two operators were late in submitting the
additional information and that its staff found
“that a number of the answers in each of
[their] submissions are incomplete”.
Several industry players have criticised
the merger, concerned about reduced
competition in the TV and internet markets.
But in a public filing dated 23 September,
Comcast accused a number of opponents of
criticising the deal for opportunistic reasons,
saying the claims had originated from
Comcast’s refusal to grant such companies
business concessions to win their support.

These concessions allegedly included
free backbone interconnection as well as
demands for sharing advanced advertising
technology that Comcast develops.
In particular, Comcast took shots at
Discovery Communications, claiming that
the media company made “extortionate
demands” as a condition for its nonopposition to the proposed merger.
In response to Comcast’s remarks,
Discovery said its competitor was trying to
divert attention away from the real issue.
“Comcast chooses to not talk about the
substantial programme discounts they
currently get, or what they would do postmerger to demand extreme discounts from
cable programmers or block the launch
of new networks and brands,” it said in a
However, Comcast claimed that the merger
with TWC would produce substantial public
interest benefits, expand the quality of
communications services available and fuel
It also quoted telco AT&T’s CEO Randall
Stephenson as saying that the transaction
will put “a heightened sense of urgency” on
competitors to “very, very aggressive[ly]”

Several industry
players have
criticised the merger,
concerned about
reduced competition
in the TV and
internet markets


invest capital in their networks and improve
the quality of their services.
In early October, more than 99% of both
Comcast and TWC shareholders approved
the companies’ proposal to issue 2.875 shares
of Comcast Class A common stock for each
share of TWC common stock.
Comcast formally announced its intention
to take over TWC in a US$45.2bn deal in
February, outbidding the US’ fourth-largest
cableco Charter Communications.
Charter later agreed to buy subscribers
being divested by Comcast and TWC to help
secure regulatory approvals for the deal.
The US Department of Justice is also
conducting an antitrust review of the deal.

Charter inks US$3.5bn
Meanwhile, Charter secured a US$3.5bn
senior secured term loan in mid-September
to finance the acquisition of 1.5 million TWC
The seven-year facility was priced at 350
bps over Libor, with a 75 bps Libor floor, and
was issued with a 0.5% discount.
Goldman Sachs Bank, BofA Merrill Lynch,
Credit Suisse and Deutsche Bank acted as joint
lead bookrunners and joint lead arrangers for
the new facility.
Buying the TWC customers will take
Charter’s subscriber base to 5.7 million and
make it the US’ second-largest cable operator.
Charter, whose controlling shareholder
is John Malone’s Liberty Media, has also
agreed to contribute users to a new operator,
GreatLand Connections, set to be hived off
from Comcast. 43


SBA offers
tower revenue

Tower operator SBA Communications has
offered US$1.54bn of secured tower revenue
securities to repay existing debt.
The offering includes US$920m of series
2014-1C securities maturing in October 2044
and US$620m of series 2014-2C securities,
which will be due in October 2049, carrying an
annual interest rate of 2.898% and
3.869%, respectively.
Proceeds from the offering will be used
to prepay in full US$680m of outstanding
series 2010-1C securities, to repay US$300m
of its revolving obligations and for general
corporate purposes.
In June, it raised US$750m through an
offering of 4.875% senior notes due 2022.
In that same month, SBA’s Brazilian
subsidiary acquired 1,641 towers from the
country’s fourth largest mobile operator Oi
for US$530m, increasing the number of its
local tower assets to 7,000.
SBA has tower assets across the American
continent, including in the US, Brazil, Canada,
Costa Rica, El Salvador, Guatemala, Nicaragua
and Panama.

completes WOW
asset purchase

Private equity firm Pamlico Capital closed
its US$262m acquisition of broadband assets
in South Dakota, Minnesota and Iowa from
regional operator WOW through its Clarity
Telecom unit in early October.
Clarity will rebrand the WOW assets as Vast
Broadband within the next few months.
Commenting on the deal, Clarity CEO Jim
Gleason said: “The growth opportunities
considering the local economy, the excellent
network and the local staff commitment
make this a very exciting acquisition into the
broadband communications industry.”
The acquisition represents the fourth
investment of Pamlico Capital III, a fund with
US$650m of aggregate commitments.
K&L Gates acted as legal advisers to Pamlico
and Clarity on the deal, while GE Capital and
SunTrust Robinson Humphrey were the lenders.
WOW is the US’ tenth-largest pure play cableco
according to the NCTA, and offers high-speed
internet, cable TV, and telephony services.


Industry weighs in
on AT&T-DirecTV deal

Microsoft has thrown its weight behind US
telco AT&T’s US$48.5bn bid to buy satellite
broadcaster DirecTV.
The technology giant called on the Federal
Communications Commission (FCC), the
country’s telecoms regulator, to approve the
deal because it would further the “deployment
of critical broadband infrastructure”.
AT&T has promised a number of broadband
commitments to help push through its
acquisition, such as rolling out an enhanced
fibre-to-the-premises service to an additional
two million locations.
Microsoft’s comments came as more than
90 former AT&T business partners, collectively
the Minority Cellular Partners Coalition,
said the regulator should block the deal over
the telco’s alleged anti-competitive behaviour
and fiduciary duty violations, or at least
conduct an evidentiary hearing over its claims.
AT&T agreed back in May to buy
DirecTV, which competes with Charlie
Ergen’s Dish Network. The deal is also subject
to approvals from the Department of Justice, a
small number of US states, and certain
Latin American countries in which the DTH
group operates.
In September, DirecTV CEO Mike White
was cited telling an investor conference that
his “best guess” was for the transaction to
close in April. A key sticking point remains the
renewal of DirecTV’s Sunday Ticket package,
which broadcasts NFL American football
games. AT&T has the right to walk away from
the deal if DirecTV fails to renew its exclusive

DirecTV CEO Mike White
programming agreement with the NFL.
White reportedly said good progress had
been made in those talks, with a deal expected
before the end of the year.
Goldman Sachs and BofA Merrill Lynch
are acting as financial advisers to DirecTV,
and Weil, Gotshal & Manges, Jones Day
and Wiltshire & Grannis are serving as
legal counsel.
AT&T is advised by Lazard, but its large
internal M&A team is reported to have taken
the lead on the transaction.

Level 3 inks US$2bn loan


US ISP and telco Level 3 Communications
has increased the size of an existing
senior secured credit facility through the
creation of a new US$2bn term loan.
Level 3 will amend and restate its
existing senior secured credit facility
to include the tranche B 2022 term loan,
due 2022, which carries an interest of
350 bps over Libor and was priced
at 99.25.
Proceeds from the loan will be used to
finance the cash portion of its US$5.7bn
merger with TW Telecom, which it agreed
to acquire in June, and to refinance some
of TW’s US$1.6bn debt.

Merrill Lynch, Pierce, Fenner & Smith,
Citigroup, Morgan Stanley, Barclays,
Goldman Sachs, Jefferies Finance and
JP Morgan acted as joint lead arrangers
and joint bookrunning managers for
the loan.
Level 3 expects to close the financing
when it finalises TW’s acquisition,
which is still subject to the execution of
definitive documents and customary
closing conditions.
Level 3 owns networks and data
centres in more than 60 countries and
has significant global subsea networks.
It provides local, national and global
communications services to enterprise,
government and carrier customers.


AT&T venture buys into Fullscreen
Otter Media, a joint venture between US
telco AT&T and The Chernin Group, has
agreed to buy a majority stake in online
media company Fullscreen.
The companies did not disclose the stake
size nor the price tag but multiple reports
suggest that the deal values Fullscreen at
between US$200m and US$300m.
Under the agreement, Fullscreen CEO
and founder George Strompolos will
remain in his position and retain a stake
in the company. British advertising
group WPP, which invested in Fullscreen

in a 2013 funding round along with
Chernin and Comcast Ventures, will
continue to be a strategic shareholder
in the company.
The transaction is due to close in
October, subject to regulatory approval.
Commenting on the deal, Aaron Slator,
president for content and development
at AT&T, said: “We are excited to have
Fullscreen as an integral part of Otter
Media, as this supports our focus on youthbased content.”
Founded in January 2011, Fullscreen
produces videos which are distributed via
YouTube. It claims to generate over four

billion monthly video views from more
than 150 million subscribers.
Otter Media was set up by Chernin,
whose founder is former News Corp
president Peter Chernin, and AT&T in
April 2014 to invest in over-the-top video
In 2013, AT&T had already teamed up
with Chernin in a failed attempt to take
control of video streaming company Hulu.
Besides mobile, fixed-line and
broadband, the telco giant also offers IPTV
services and is in the process of acquiring
satellite broadcaster DirecTV
for US$48.5bn.

CenturyLink gears up for US$500m bond
US telco CenturyLink is looking to sell
US$500m of 6.875% notes due 2054, via its
wholly-owned subsidiary Qwest Corporation,
to repay some existing debt.
The underwriters of the offering have the
option to acquire up to an extra US$75m of
notes to cover any over-allotments.
Joint bookrunning managers for the offering
are Merrill Lynch, Pierce, Fenner & Smith,
Morgan Stanley, UBS and Wells Fargo. The

subsidiary said it would use the proceeds,
together with available cash or additional
borrowing from CenturyLink or an affiliate, to
repay all US$600m of 7.5% notes due October
2014, including interest of about US$23m.
Fitch, which assigned the proposed offering a
BBB- rating, noted that Qwest intends to borrow
US$100m from affiliated lenders.
The agency said it expected CenturyLink to
show steady improvement in its revenue profile
over the next couple of years, mainly from highspeed data, advanced business services,

as well as managed hosting and cloud
computing services.
In September, it was reported that
CenturyLink was looking to acquire cloud
computing provider Rackspace, which would
better enable it to stand up to competition from
the likes of Amazon, Microsoft and Google.
CenturyLink provides data, voice and
managed services in local, national and
select international markets through its fibre
optic network and multiple data centres for
businesses and consumers.

NII files for bankruptcy

Operator owes its debtors US$4.35bn
US-based NII Holdings, which operates
under the Nextel brand in Latin America, has
filed for relief under Chapter 11 of the US
Bankruptcy Code after failing to meet debt
In a mid-September statement, NII
described the move, which it warned in
August was likely to happen, as the first step
toward restructuring its debt and improving
its liquidity.
“The company has been in discussions
with its major shareholders over the last
several months and is optimistic that those
discussions will lead to a debt restructuring
plan that will be reflected in a plan of
reorganisation that will be submitted in the
proceedings in the near future.”
NII’s operating units in Brazil, Mexico and
Argentina are not part of the US bankruptcy
proceedings and will continue to operate
as usual, NII said. In a related filing, NII,
which earlier this year hired UBS to assess its

strategic options and Rothschild to improve
its capital structure, said its debtors have
a principle amount of about US$4.35bn of
senior notes outstanding.
These include US$800m of 10% notes due
2016, US$500m of 8.875% notes due 2019,
US$1.45bn of 7.625% senior notes due 2021,
US$900m of 11.375% notes due 2019, and
US$700m of 7.875% notes due 2019.
Under the terms of the debt instruments,
the principal and accrued interest is due
immediately as a result of the Chapter 11
NII treasurer Daniel Freiman reportedly
stated in court papers that the company
had lost customers to rivals offering more
attractive 3G services as it raced to complete
the rollout of its own 3G network.
NII’s competitors include Spanish telecoms
group Telefonica and Carlos Slim’s Mexicobased America Movil.
Freiman reportedly added that NII
consequently offered lower-priced wireless
plans and relaxed its credit policies to

attract new customers, which ultimately
led to lower revenues and greater expenses
related to bad debt.
In a statement on its H2 2014 results, NII
said it lost 77,000 subscribers in the quarter,
bringing its total customer base to 9.4 million
subscribers. Operating revenues were down
23% on the Q2 2013 result to US$969m. Net
debt stood at US$4.8bn, while consolidated
cash totalled US$1bn.
The treasurer reportedly said the company
is focusing on improving its core markets and
that debtors expect the Brazilian and Mexican
units to return to “significant revenue growth”
from 2015.
In August, NII agreed to sell Nextel Chile for
a reported US$35m to a joint venture named
Fucata comprised of Argentine media group
Grupo Veintitres, British investment firm ISM
Capital and US private equity firm Optimum
Meanwhile, Fucata reportedly aims to tie
up an acquisition of Nextel Argentina by the
end of October. 45


Four prequalify for 4G auction
Local telcos Movilnet and Telefonica’s
Movistar, as well as potential new
entrants Multiphone Venezuela
and DirecTV’s Galaxy Entertainment
have prequalified to take part in the
country’s upcoming 4G spectrum

auction. National regulator Conatel
said Movilnet, a subsidiary of
state-backed Cantv, and Movistar will
bid for frequencies in the 1,710 MHz-2,170
MHz band.
Movistar will also bid for spectrum
in the 2,500 MHz-2,690 MHz band,
along with Multiphone and Galaxy

Entertainment. Licences will be valid for
up to 15 years.
At the end of August, Conatel restarted
the 4G tender process which had been
suspended in January.
Besides Movilnet and Movistar,
Telvenco’s Digitel GSM also provides
mobile services in the country at present.

CyrusOne closes US$600m facilities
Data centre service operator CyrusOne
has finalised a US$450m senior unsecured
revolving credit facility and a US$150m senior
unsecured term loan.
The new RCF, which is due in October 2018
and bears a 1.7% interest rate over Libor,
replaces a US$225m revolver which paid
325 bps over Libor. The term loan, which
will mature in October 2019, carries a 1.65%


interest rate over Libor. The company has
decided to draw US$75m of the term loan
at closing. Commenting on the transaction,
CFO Kimberly Sheehy said: “In moving to
an unsecured structure, while significantly
increasing the aggregate commitment, we
have enhanced financial flexibility and the
capacity to fund our growth at attractive
interest rates.”
KeyBank Capital Markets, JP Morgan,
Barclays, RBC Capital Markets and

TD Securities served as joint lead arrangers.
CyrusOne, in which US telco Cincinnati Bell
has a 43.7% stake, operates as a real estate
investment trust (REIT), which
receives special tax considerations
and typically offer investors high yields
as they have to distribute a minimum
of 90% of their taxable profits as dividends.
It owns 25 data centres, 23 of which are
in the US. The other two are in London
and Singapore.


The REIT solution

Windstream plans to go where no US fixed-line operator has gone before and spin off
its network assets into a real estate investment trust (REIT). The REIT’s designated CEO,
Tony Thomas, tells TelecomFinance that this model could do for wireline companies
what towercos have done for wireless
Guy Ferneyhough

Senior Reporter,

Windstream CFO Tony Thomas

If wireless companies
can get comfortable
selling their towers
I don’t think it’s
that much of an
intellectual stretch
for a wireline
company to
get comfortable
its network

Windstream, a network operator from
Arkansas, believes it is at the vanguard of
a revolution which could raise significant
capital for fixed-line and cable operators
across the US.
At the end of July, the company announced
that it was spinning off part of its network
into a real estate investment trust (REIT) after
receiving approval from the Internal Revenue
Service (IRS) in a private letter ruling.
According to Tony Thomas – the telco’s CFO
for the past five years and designated CEO of
the REIT- providing the spinoff goes to plan –
Windstream is the first he knows of to receive
permission from the IRS for such a plan.
The REIT will operate as an independent
publicly-listed company from Windstream,
but will have a long-term lease arrangement
with the telco which could run until 2050. As
part of this arrangement, Windstream will
still be responsible for the maintenance and
operation of the network.
However, the relationship between the
two entities will be solely commercial.
Shareholders in Windstream will receive
shares in the REIT proportional to their
ownership of the telco, but Windstream itself
will not hold a stake in the trust.
Windstream say this structure has four
benefits. Chiefly, it unlocks shareholder value
and improves its capital structure. REITs
typically have higher valuations and carry
more leverage than telcos. In this transaction,
US$3.2bn of Windstream’s debt is being
transferred to the trust allowing Windstream
to cut its debt-to-OIBDA ratio by half a turn.
Thomas says this means you get an asset mix
aligned to the business outlook and strategic
objectives of each company.
One US banking source said the REIT
could trade at an EV/EBITDA multiple of 14x,
given what others in that class are valued at.
However, the banker warned that Windstream
could end up trading lower than its current
6x ratio and was curious to see what the
aggregate change would be.
Another way value is created by the REIT
is through the single-level tax treatment.
REITs do not usually have taxable income
because they distribute dividends up to
their taxable income, if not in excess of
that. In itself that creates roughly US$135m
of free cash flow from this single level of
taxation, according to Thomas. Lastly, the

financial benefits of the transaction will allow
Windstream to invest more in its networks.
The operator plans to accelerate broadband
investments and its transition into IT.
Thomas says the area the two companies
will work most closely together on the
potential funding of geographic network
expansion via the REIT.
In his bid to convince investors of the
model, Thomas uses an analogy with
towercos in the mobile sector, which buy
towers from mobile operators before leasing
them back.
“The tower companies have done a great
job of infusing capital into the wireless
industry,” Thomas said. He describes them
as being available as a “funding vehicle”
for mobile operators in the middle of a
significant capex upgrade cycle following the
advent of 4G.
“What we’re trying to do at this new REIT
is to be the provider of capital to the wireline
communications industry, which has not
had the funding vehicle that the wireless
companies have had through the wireless
tower REITs.”
When asked if fixed-line operators would
be prepared to part with some of their
network assets, Thomas’ feeling was that
it would catch on: “If wireless companies
can get comfortable selling their towers I
don’t think it’s that much of an intellectual
stretch to find that wireline companies get
comfortable separating their networks.”
The banker believes other operators will
follow suit, particularly because it is looking
likely the transaction will get the blessing
of the FCC along with the tax authorities.
However, the source does not expect to see
any action from a large carrier for at least
six months until the REIT starts trading.
The banker also said that separating
network assets may not only come through
spincos. Operators could opt for a saleleaseback transaction which, while not as
tax efficient as a full spinoff, would be a
simple transaction and still offer benefits.
The change in asset-class has numerous
applications and we could see a range of
different transactions, the person said.
Windstream expects to list the trust in the
first quarter of next year which could pave
the way for a significant transformation of
the US fixed-line and cable markets. 47

special report


Tom Rebbeck

Research Director,
Analysys Mason

Vodafone’s acquisition of Cobra Automotive
Technologies, completed on 8 August 20141,
is part of a spate of merger and acquisition
(M&A) activity in the M2M space. We are
aware of more than 20 deals completed in
2014, the most significant of which are listed
on the right.
However, the Vodafone deal is unusual
in that it involves a telecoms operator. Of
around 100 M2M-related acquisitions that we
have tracked, we are only aware of five that
have involved a telecoms network operator.
Verizon, with its US$612m purchase of
Hughes Telematics in 2012, is one of the few
operators – along with Vodafone2 – to have
been active in M2M M&A.

Telecoms operators
are aware that
connectivity, their core
offering, represents a
low share of the total
value of M2M

This lack of activity by telecoms operators
is surprising because it potentially limits
opportunities to generate more value from
M2M. For most M2M services, connectivity
represents only a small share of the total
value of M2M. If we include devices and
applications, connectivity rarely represents
more than 50% of total value – it can
represent less than 20%.
Telecoms operators are aware of this and a
common aim is to gain more of the value of
M2M services. According to Analysys Mason’s
M2M carrier scorecard 20133, operators
have indicated that they aim to generate
only 47% of M2M revenue from connectivity
by 3Q 2016, with the remaining 53% from
applications and other services. Operators
indicated that on average, 79% of revenue
was from connectivity in 3Q 20134 (see graph
on opposite page).



Cobra Automotive


Cobra is a vehicle tracking
and telematics company,
based in Italy


Axeda Corporation


Axeda has developed an
application platform for M2M/
IoT. PTC also owns Thingworx,
which it acquired for US$112m
in December 2013



US$37.5m Numerex, a provider of M2M
solutions to enterprises, added
to its tracking and monitoring
capabilities through the
acquisition of Omnilink.
Numerex has made five
acquisitions of which we are





Sascar Participações €530m

JV of Summit
Partners and
FleetCor Technologies

Operators that have
developed end-toend M2M solutions
have favoured safe
partnerships over bold
Operators aspire to increase revenue from
non-connectivity services, but there is a risk
that they are not taking the steps required
to do so. To gain a greater role in M2M,
operators have three options:

Google purchased Nest, a
connected home company in
early 2014. It bolstered Nest’s
capabilities with the purchase
of Dropcam, a video
monitoring solution provider
for US$555m in July 2014.
Sascar is a Brazilian fleet
management company

Undisclosed Masternaut is a UK-based fleet

management company

❒ Partnering
This has been the dominant approach taken
by operators to date.
Operators partner with service providers,
either acting as a simple sales channel for
another brand, or reselling a white-label
This approach provides a fast route to
market, but gives the operator limited
control over the service and only a small
share of revenue.
Longer term, opportunities to partner may
decline because consolidation means that
potential partners gain scale and have less
need for the sales channel that operators
can offer.

Source: Analysys Mason, 2014

Telecoms operators are
curiously absent from the
vibrant IoT and M2M market

special report

Source: Analysys Mason, 2014

Percentage of revenue

SERVICES, 2013 AND 2016

3Q 2016 (target)

3Q 2013 (actual)
Applications and other services
❒ Developing services in-house

❒ Relative to the core business of basic

Most operators lack the skills to develop
services in-house. Even where they do, time
to market will be an issue. We are not aware of
any operators that have fully developed M2M
services in this way.

voice, data and messaging, M2M is still
relatively small. Few operators earn more
than 5% of total revenues from services
outside of the core business.
As a result, M2M teams may have little
management attention and access to only
limited resources. We believe this approach is
a mistake as it reinforces the reliance on core,
and frequently commoditised services.

❒ Acquisition
Targets can bring a mixture of customers,
vertical expertise and development
capabilities. The M2M services – a mix
of device sales, application provision
and ongoing support – are all aspects that
telecoms operators are well positioned
to offer. Furthermore, operators have the
financial clout to experiment with new types
of business model (for example, no upfront
fee, revenue share, savings share and so
on) – all of which may be hard for smaller
organisations to test.
Acquisition has downsides too – the
geographical coverage of a target may not
match the operator’s footprint, integration
can be challenging and the vertical focus of
most M2M companies may not sit well with
the generalist nature of most operators.
Despite the logic in investing in new areas
for growth, telecoms operators have been
reluctant to commit to M&A activity.

❒ Operators have been unsuccessful
at M&A in the past and are unwilling to
repeat mistakes. While successful M&A
between telecoms operators is relatively
common, telecoms operators’ record when
purchasing non-network companies has often
been poor. For example, Telefonica closed its
Jahjah subsidiary in January 2014, four years
after the US$200m acquisition.
As a result of these past failures, telecoms
operators may be reluctant to pick winners
through acquisition, and instead favour the
partnership approach.
Telecoms operators need to decide how
seriously they want to make a play in
M2M. While some of the reluctance to
commit to M&A is understandable, we
still believe that, if they are to generate

1: See
2: Vodafone also has stakes in Zelitron, an M2M solutions developer,
Device Insight, which has an M2M platform, and (through Vodacom)
X-Link, a developer of retail payment terminals and other M2M
3: See

significant revenues from M2M they need
to be bold and pursue acquisitions. Only
by making bold moves, as Vodafone and
Verizon have done, will they have a chance
of generating significant revenue from this
growing market.

About the
Tom Rebbeck started his career as
reporter on TelecomFinance and is a
former editor of SatelliteFinance.
Tom is now Research Director at
Analysys Mason where he leads much of
the M2M work. Recent projects include:
helping an operator in Southeast Asia
select which vertical markets to focus
its M2M efforts on; a series of strategy
sessions for a large regional operator in
Africa; and a cost model for a vendor of
M2M connectivity platforms.
Tom has published reports and articles
on M2M, including most recently on the
opportunity for Low Power, Wide Area
networks (LPWA)5.

4: For more information, see Analysys Mason’s The outlook for
M2M: definitions, trends and operator strategies, http://www.
5: See
September%20201- 49





Africa (various)
Africa (various)
Africa (various)

Zain Bahrain

Bharti towers buy
Financing for Bharti deal
Tower buy


American Tower
BR Towers
On Telecom


Providence Equity Partners
Telecom Italia
Telecom Italia
T4U Holding Brasil
Bell Canada
Virgin Mobile CEE

BR Towers acquisition
Sale to American Tower
Potential TIM Brasil buy
US$97.5m equity
Gruppo TorreSur sale
Strategic review
TIM tower sale
Potential €20m loan
Bell Aliant privatisation
C$1.25bn bond
Bankruptcy proceedings
€40m equity capital

Standard Chartered
Standard Chartered, Standard Bank
Moelis & Co
National Bank of Kuwait, Gulf
International Bank
Banco Santander
Deutsche Bank
BTG Pactual



Tower sale
E£4bn loan?



SFR buy




Virgin Mobile
Tele Columbus
Advantage Partners
Guine Telecom

€3bn bond for
Jazztel buy
Sale to Numericable
SFR sale
Offer for Forthnet’s Nova
Hellas Online takeover
GTA stake sale?


Citic Telecom
Loop Mobile
Reliance Jio Infocomm
Viom Networks
Bakrie Telecom
Link Net
XL Axiata
XL Axiata
Solusi Tunas Pratama


Zain Iraq
Alessandro Falciai
Hutchison Whampoa
Telecom Italia


RCom cable tie-up
Bharti Infratel exit?
Sale to Bharti Airtel
Cable tie-up with Citic
US$750m loan
Capital raising options
40% stake sale
2.7% stake sale
Tower sale to STP
Tower buy from
XL Axiata
EI Towers stake sale
Potential Wind/3 merger
Fastweb sale?
Tower sales
Potential Wind/3 merger

Credit Suisse
Banco Bradesco
Morgan Stanley
BofA Merrill Lynch, Itau BBA, UBS, Citi?
CST Trust Company
CIBC, TD, National Bank
CEE Mobile Capital, Delta Partners,
Emerging Markets TMT Growth Fund
Civitas Partners
Bank of Alexandria, Banque Misr,
Barclays, Commercial International
Bank, Emirates NBD, HSBC, National
Bank of Egypt, Qatar National Bank?
JP Morgan, Morgan Stanley, Barclays,
Perella Weinberg
Citi, Morgan Stanley, Natixis
DC Advisory?
Citigroup, Lazard
Goldman Sachs, JP Morgan
BofA Merrill Lynch
West African Development Bank, Africa
Standard Chartered?
Morgan Stanley, UBS, Citigroup?
Kotak Mahindra?
Korea Exim Bank
Credit Suisse, Citigroup
FTI Consulting
Goldman Sachs, Credit Suisse?
Mandiri Securities
BofA Merrill Lynch
Standard Chartered, JP Morgan
Melak Investments
Mediobanca, Unicredit
Goldman Sachs?
Deutsche Bank, Banca IMI?
Morgan Stanley?






Green Packet
Telekom Malaysia
Liquid Telecom
America Movil
Pan Asia Majestic Eagle

Tower sale
Strategic review
Packet One sale
Packet One buy
US$150m loan?
Asset divestments
Potential Iusacell merger
US$85m loan


Liberty Global
Tele2 Norway

SBI Capital Markets?
Ziggo takeover
Takeover by Liberty
Tower sale
Tower buy from Etisalat
Tower buy from MTN
Tower sale
US$2.16bn Get buy
Strategic review
Tele2 Norway buy
Bid for PT
€175m bond

South Africa
South Africa
South Korea

Russian Towers
Slovak Telekom
Deutsche Telekom
Telekom Slovenije



US$500m financing
Rbs2bn loan
Company sale
Telekom Slovenije bid?
Sale to Telkom
BCX buy
Acquisition by
Jazztel acquisition
€800m bond

RHB Investment Bank, JP Morgan
CIMB Investment Bank, Goldman Sachs
Standard Chartered?
BofA Merrill Lynch?
DBS, ING, OCBC, Standard
Chartered,Sumitomo Mitsui
Review of United Telecom stake?
BofA Merrill Lynch, Morgan Stanley
JP Morgan, Perella Weinberg, ABN Amro
Standard Bank
Goldman Sachs
JP Morgan
ABG Sundal Collier Holding
Goldman Sachs, Morgan Stanley?
BNP Paribas, ING, Societe
Generale, Caixabank
Swiss Capital
China Development Bank
Eurasian Development Bank
Citigroup, JP Morgan
JP Morgan, Barclays?
Investec Bank
Absa Bank
The Raine Group


MBK Partners
Wei family
Charoen Pokphand


China Mobile
True Corp
Liberty Global,
The People’s Operator


CNS stake sale
CNS stake buy
US$440m loan to buy
True Corp shares
True Corp stake buy
Stake sale to China Mobile
€70m facility
All3Media acquisition

Daisy buyout
Monitise stake sale
US$48.5bn DirecTV buy
US$3.5bn loan

BofA Merrill Lynch
BBVA, Credit Agricole, Caixabank,
Mitsubishi UFJ, RBS, Santander
Morgan Stanley
Bangkok Bank
Deutsche Bank?
Liberum, Oakley Capital
Barclays, RBC Capital Markets
Oriel Securities, Cameron Barney
JP Morgan

JP Morgan
JP Morgan
Goldman Sachs Bank, BofA Merrill
Lynch, Credit Suisse, Deutsche
Bank 51







US$500m bond



US$600m facilities


Level 3
Level 3

US$48.5bn sale to AT&T
TW Telecom acquisition
US$2bn loan


NII Holdings
Pamlico Capital

Strategic review
WOW asset purchase




TW Telecom
Zayo Group

US$250m investment in
Sale to Level 3
Asset sale
Asset sale to Pamlico

Merrill Lynch, Pierce, Fenner &
Smith, Morgan Stanley, UBS,
Wells Fargo
KeyBank Capital Markets, JP
Morgan, Barclays, RBC Capital
Markets, TD Securities
Goldman Sachs, BofA Merrill Lynch
Citi, BofA Merrill Lynch
Merrill Lynch, Pierce, Fenner &
Smith, Citi, Morgan Stanley,
Barclays, Goldman Sachs, Jefferies
Finance, JP Morgan
UBS, Rothschild
GE Capital, SunTrust Robinson
The Raine Group


TAP Advisors
RBC Capital Markets
Morgan Stanley, Barclays, Goldman


Western Europe

❒ German cableco Tele Columbus has
appointed a chairman to its new supervisory
board, as its operating arm converts into a
stock corporation for its possible IPO (see
page 6).
Frank Donck, former chair of Belgian
cableco Telenet, will lead the new threemember supervisory board.
The other members are Carsten Boekhorst,
a partner with the UK’s Pamplona Capital
Management, and former Belgian prime
minister and OECD vice president Yves
❒ Com Hem has made Tomas Kihlstrand
its interim CFO after its long-time finance
chief Joachim Jaginder went on sick leave.
Kihlstrand joined the Swedish cableco in
late September and will remain in the post
during Jaginder’s absence.
Kihlstrand has taken on a number of
interim CFO assignments before at
Swedish companies, including networking
venture Transmode, IT solutions group
Atea, and former wireless infrastructure
enterprise Allgon.
Jaginder has been Com Hem’s CFO since
2008 and was acting as CEO earlier this year
between Tomas Franzen’s departure and
Anders Nilsson’s arrival.
❒ Eircom’s CEO has decided not to renew
his contract with the Irish incumbent and has
stepped down from his position.
Herb Hribar returns to the US after two
years with Eircom. The board has named
CFO Richard Moat as acting CEO with
immediate effect.
Hribar’s departure came hot on the heels
of the completion of a strategic review which
concluded that neither a sale nor an IPO
would match the owner’s valuation of the
operator at present.

❒ Jon Fredrik Baksaas has agreed to
spend one more year as head of Norway’s
incumbent operator Telenor before stepping
down from the role at the end of 2015.
The CEO, who turns 60 in November, has
been contracted to act as a special adviser to
Telenor’s board throughout 2016.
No decision has been taken on a
replacement for Baksaas, who was appointed
to his position in April 2002. He has been at
the telco since 1989.

❒ Steve Makin will step down as CFO
of British fixed-line operator TalkTalk,
following the company’s interim results on
11 November.
Makin, who joined the company as CFO in
April 2013, has resigned “for purely personal

recruitment process will be overseen by an
independent assessor and the appointment
is subject to the approval of the secretary of
state for culture, media and sport, Sajid Javid.
Richards became CEO of Ofcom in 2006,
after joining the regulator’s board in 2003 and
being made COO in 2005.
Prior to Ofcom, he was a senior policy
adviser to the then Prime Minister, Tony Blair,
and before that he was controller of corporate
strategy at the BBC.

❒ Cypriot incumbent Cyta has made Yiannis
Koulias the CEO of its Greek fixed-line and
broadband business, Cyta Hellas.
Koulias takes over from George Koufaris
who resigned from the state-owned operator
The new CEO will continue to oversee
Cyta’s wholesale operations and subsidiaries
Cyta UK and Cytaglobal Hellas.
The Cypriot government plans to spin off
Cyta by the end of 2015.

❒ UK utility services provider Telecom Plus

Ed Richards is to leave his role as Ofcom CEO
reasons”, a spokesperson said. He will be
replaced by Iain Torrens, currently group
finance director of UK-based voice and
electronic dealer broker ICAP.
Commenting on Torrens’ appointment,
TalkTalk CEO Dido Harding said: “Iain brings
with him a wealth of experience, technical
depth and outstanding leadership qualities.”

❒ Incumbent Portugal Telecom (PT) has
selected current board member Joao Mello
Franco to be the company’s new chairman.
He replaces Henrique Granadeiro, who
stepped down from his role as PT’s CEO and
chairman in early August.
His resignation came just a few weeks after
Rioforte’s default on a debt payment to the
Portuguese telco forced it to accept a lower
stake in its merger with Brazilian operator Oi.
A PT spokesperson said the company will
not appoint a new CEO, as the new corporate
structure resulting from the merger with Oi
would no longer justify having a separate
executive committee.

❒ Ofcom’s CEO Ed Richards will leave the UK
telecoms regulator at the end of December
after eight years in the job.
Ofcom is working with headhunter
Zygos Partnership to find Richards’ successor
and hopes to have recruited someone by
early 2015. The position of CEO is a public
appointment made by Ofcom’s board. The

has found a replacement for its former CFO
Chris Houghton, who vacated the role on
3 October.
Nick Schoenfeld, formerly finance director
of diversified private investment group
Hanover Acceptances, will start as Telecom
Plus’s CFO in the New Year.
Prior to his six years at Hanover,
Schoenfeld had spells at Kingfisher,
Castorama, the Walt Disney Company and
Boston Consulting Group.

Eastern Europe

❒ Polish holding company Hawe has hired
Piotr Kubaszewski to replace Krzysztof Witon
as CEO.
Warsaw-listed Hawe, which provides
telecoms and engineering services, said on 11
September that Kubaszewski’s appointment
was effective immediately.
Witon also left his role as supervisory board
chairman of Hawe subsidiary Mediatel. No
reason was given for his departure.

❒ Struggling Croatian fixed-line operator
Optima Telekom has named Tomislav
Tadic as its new finance head. Tadic started
the role on 1 October and has a two-year
contract. He also joins the board of directors.
Previously, Tadic was CFO of Croatia’s Nexe
Group that focuses on producing building
construction materials. He has also held
management positions with companies
including Croatian bank PBZ, investment firm
Proventus and CCS Investments.

❒ Former MTS executive Dmitry Nagorny
has reportedly been appointed CEO of 53

Uzbekistan’s Universal Mobile Systems
(UMS) , the new JV between Russian telco
MTS and the Uzbek government.
MTS, Russia’s largest mobile operator,
announced in July that it had signed an
agreement with Uzbek authorities to resume
operations in the country. The telco said it
would have a 50.01% stake in the new JV,
while an Uzbek state-owned enterprise would
own the remaining shares.
Assets, equipment and infrastructure
previously owned by MTS’ former Uzbek
subsidiary Uzdunrobita, which lost its licence
in August 2012 after the government accused
it of evading taxes, will be transferred to the JV.
UMS’ commercial launch is reportedly set
for 1 December.

Naguib Sawiris said: “I would like to thank
Karim for his hard work, which paved the
way for OTMT and served as a solid
foundation for this company to take off on
the road of success.
“I would also like to welcome Ahmed
Abou Doma on board of OTMT. I have great
confidence in his abilities and his vision
which he will surely use to build a success
story for OTMT.”

❒ Israeli mobile operator Partner

Middle East / Africa

Communications, which operates under
the Orange brand, has appointed Issac
Benbenisti as its deputy CEO.
Benbenisti, who will start in his new role
on 2 November, was previously CEO of Bezeq
International, a subsidiary of local incumbent
Bezeq, but left in February after seven years at
the helm.

❒ Deon Fredericks has become the

❒ Airtel Kenya has appointed Venkat

permanent CFO of South African operator
Telkom, a month after his predecessor left.
Jacques Schindehutte stepped down
from the company on 11 August following a
disciplinary process.
He was first suspended in October last year
as a result of an investigation by Telkom’s
board into allegations related to personal
Fredericks, who was the company’s deputy
CFO at the time, has filled in for Schindehutte
since the disciplinary process began.

Ramakrishnan as its finance director.
Before joining the country’s secondlargest mobile operator, Ramakrishnan was
financial reporting manager at Indian parent
Bharti Airtel. Prior to that, he was head of
consolidation at Vodafone in India.
Topyster Muga is also making her debut
at Airtel Kenya as head of the telco’s mobile
payment unit, Airtel Money.

❒ Israel’s largest mobile operator, Cellcom,
has appointed Ami Erel as its new chairman,
succeeding Raanan Cohen.
Cellcom said in a statement that Erel was
picked by Discount Investment Corporation
(DIC), its largest shareholder with a 78.5%
“Erel’s appointment is in accordance
with the requirement of the company’s
telecommunications licence and articles of
association that at least 20% of the company
directors be appointed by Israeli citizens
and residents from among the company’s
founding shareholders… namely DIC,” the
operator said.

❒ Millicom has named Uche Ofodile as the
new general manager of its Tigo subsidiary in
the Democratic Republic of Congo.
She joins from Vodafone Ghana where
she was chief marketing officer.
Ofodile replaces Stephane Teyssedre, who
left Millicom a few months ago.
❒ The CEO of Egypt-based telecoms
holding Orascom Telecom Media
and Technology (OTMT), Karim Beshara,
has resigned from his position to pursue
“new private business opportunities”,
he said.
The board has appointed Ahmed Abou
Doma to replace him.
Egyptian billionaire and OTMT chairman


❒ Saudi mobile operator Etihad Etisalat
(Mobily) has appointed Serkan Okandan to
the newly-created position of deputy CEO to
support daily operational works.
Since January 2012, Okandan has been
CFO at Mobily’s parent company, UAE-based
telecoms group Etisalat.
He will reportedly remain as finance head
of Etisalat on top of his new responsibilities.
Prior to joining Etisalat, Okandan was
group CFO of Turkcell from 2006. He also
served as acting CEO of the Turkish carrier’s
operations in Ukraine in 2010.


❒ Singapore-based telco SingTel has
promoted Allen Lew to CEO of its Australian
mobile and satellite operator Optus amid
wider changes to the group’s organisation
Lew, formerly head of SingTel’s mobile
solutions division Digital Life, replaced Paul
O’Sullivan as he became chairman of Optus
on 1 October.
Chua Sock Koong, CEO of the SingTel
group, said: “After 10 years at the helm of
Optus, Paul has expressed his desire for a
change to a non full-time role.” Jonathan
Auerbach, who led advisers McKinsey &
Company’s Asian TMT operations, becomes
CEO of Digital Life, while SingTel CFO
Jeann Low is adding responsibilities for
group strategy and group general counsel to
her current portfolio. Supporting her will
be Lim Cheng Cheng, who is currently

managing director of group strategic
investments but will be appointed
deputy CFO.

❒ Kazakhstan’s Kcell, a subsidiary of
TeliaSonera, has lost both its CEO and CFO.
The Stockholm-listed telco has promoted
Kcell’s chief technical officer, Rikard Slunga,
to the role of interim CEO.
He replaces Ali Agan, who left the
company on 30 September. TelecomFinance
understands that Agan will still be working
in the telecoms industry but will be based
in Istanbul.
Kcell’s CFO Baurzhan Ayazbaev followed
Agan out the door at the beginning of
October. No reason was given for his
The board has already started the process
of recruiting a permanent CEO.
Agan took the helm of Kcell in May 2013
and was previously CEO of Ucell, TeliaSonera’s
Uzbek unit.

❒ Malaysian WiMax operator Packet
One’s (P1) new controlling shareholder
Telekom Malaysia (TM) has appointed a
new management team and board for the
On the management team, P1 CEO and
managing director Puan Chan Cheong will
be joined by Nora Junita Mohd Hussaini who
will serve as chief financial officer, according
to the shareholders, which also include Green
Packet and SK Telekom.
Simultaneously, Cheong resigned from
the CEO role at Green Packet, which is no
longer P1’s controlling shareholder. He was
succeeded by CFO Kay Yen Tan.
Other P1 appointments include TM
executive VP of SME, Azizi Hadi, taking up the
role of chief operating officer.
Meanwhile, TM group CEO Zamzamzairani
Mohd Isa will serve as the chairman of the
P1 board.
TM completed its MR350m (US$106.3m)
acquisition of a 55.3% stake in P1 in
September. Green Packet and SK Telekom
now hold 31.1% and 13.6% stakes respectively.


❒ Zeinal Bava, the CEO of Brazilian telco
Oi, stepped down with immediate effect on
7 October.
Oi, which is in the process of merging
with Portugal Telecom (PT), said the
company’s current CFO Bayard De Paoli
Gontijo will take on the role of interim CEO
until a replacement is appointed.
The company did not elaborate on the reason
for Bava’s departure (see full story on page

❒ The CFO of Canadian telecoms group Bell
Canada Enterprises (BCE), Siim Vanaselja,
will retire after the 2015 annual shareholders’
general meeting, scheduled for 30 April.

He will be replaced by Glen LeBlanc, who
has been CFO of its fibre unit Bell Aliant
since 2005.
Once BCE finalises the privatisation of
Aliant, LeBlanc will serve as senior VP, finance
for BCE until Vanaselja, who became CFO in
2001, leaves.
At the end of September, BCE said that
Aliant CEO Karen Sheriff would step down
from the role on 31 December 2014.
The announcement came as BCE is buying
out the public shareholders in Aliant. BCE
already owns 44% of the fibre operator and
exercises managing control.
As a result of the privatisation, which is
due to complete by 31 October, Aliant will
cease operating as a publicly traded company
and will be integrated into BCE’s national

❒ The CFO of Canadian fixed-line operator
and DTH provider Shaw Communications,
Steve Wilson, has decided to retire after a
decade in the role.
Shaw is currently looking for a replacement
for Wilson, who is due to continue in the
position until the end of the year.
Shaw CEO Brad Shaw said Wilson
was “instrumental” in helping build the
foundation for the company’s future growth,
including the acquisition of its media

business in 2010, the evolution of its wireless
and Wi-Fi strategies.

❒ Tech giant Google has named Dennis Kish
as the new head of its fibre network venture
Google Fiber.
The former Qualcomm executive was
appointed for his operational experience and
replaces Milo Medin, who will remain at the
company and advise Google Fiber.
Kish reports to Craig Barratt, Google’s
senior vice president, access and energy, who
in turn reports to CEO Larry Page.
❒ The board of Telecommunications
Services of Trinidad and Tobago (TSTT)
has named Ronald Walcott as its new CEO.
Walcott, who replaces the acting CEO
George Hill, was the incumbent’s executive
vice president of mobile service-s and
Hill took the interim role from Dianna de
Sousa, who had held the position since TSTT’s
last permanent CEO, Roberto Peon, resigned
in March 2012.

❒ US-based ISP and telecoms group
Windstream has named Bob Gunderman as
its interim CFO. Gunderman, who currently
serves as the company’s senior VP and
treasurer, will replace Tony Thomas, who

has been appointed president of the listed
real estate investment trust (REIT) which
will result from the spinoff of some of the
company’s network assets.
Upon closing of the transaction – expected
in Q1 2015 – Thomas will become CEO of
the REIT.
Windstream said it is currently conducting
a national search to find a permanent CFO.
Separately, Windstream COO Brent
Whittington resigned on 1 September. At
the time, the company said its role would be
scrapped and that his duties would be split
between Mark Faris, executive vice president
of operations, and Randy Nicklas, executive
vice president of engineering and chief
technology officer.

❒ US VoIP network operator Vonage has
named Alan Masarek as its new CEO following
Marc Lefar’s decision to leave the company.
Lefar will step down from his post on 5
November after six years, and Masarek will
start on 6 November.
Vonage’s new leader joins from Google.
The internet giant acquired a software
business Masarek co-founded called
Quickoffice in 2012.
Masarek then became Google’s director
of web browser Chrome and its
applications offering.

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