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On June 29, 2008 Netia concluded an agreement to buy a 100% interest in Tele2 Polska Sp. z o.o.
The acquisition values the Tele2 business at an enterprise value of 29.1 mln EUR (98.0 mln PLN). Including the target net cash position of 2.3 mln EUR (7.8 mln PLN), the equity value amounts to 31.4 mln EUR (105.8 mln PLN) and may increase by an additional 4.8 mln EUR (16.2 mln PLN), depending on performance post closing. This valuation translates to a maximum of 156 PLN (46 EUR) per voice customer, which is broadly comparable to acquisition costs for new customers acquired organically.
The acquisition of Tele2 is a break-through step in realizing Netia’s mass market strategy. It will result in Netia being the indisputable leader amongst alternative telecoms operating on the Polish market. Furthermore, Netia will benefit from significant synergy and economy of scale effects.
By taking over Tele2 Netia will increase its customer base to over 300 thousand broadband services and over 1.2 million fixed voice services. The revenues will increase over 40 percent with positive incremental EBITDA (earnings before interest, taxes, depreciation and amortisation)) expected during the first twelve months after the acquisition. The new customers bring significant potential for cross-selling of services which would lead to reduction of subscriber acquisition costs (SAC).
As up to 80 percent of Tele2’s transmission and interconnection network overlaps with Netia’s, Netia will benefit from quick and significant synergies from network rationalisation.
“Combining our strategy and excellent client service with new opportunities created by this revolutionary transaction we will become even stronger in competing with TP and other companies” – said Miroslaw Godlewski, Netia’s Chief Executive Officer .
Following closing of the transaction and integration of the two companies, Netia will also benefit from economies of scale, i.e. savings in outsourcing, absorption of personnel, IT maintenance and sales cost optimization. Budgets for promotion of services will be combined and, despite being reduced in total, will still allow Netia to increase its share of voice.
Presentation on the transaction
Audio recording of the conference call on the acqusition held on June 30, 2008 is provided below.
The recording of our conference call is only a discussion of the official current filing regarding the acquisition of Tele2 Polska by Netia and in the case of any alleged discrepancy or ambiguity of the oral information with our current filing No. 35/2008 dated June 30, 2008, such oral information should be construed in the context and consistent with the announced filing. We shall bear no responsibility for any use of the oral information presented on the phone call and reliance should be limited solely to information released by the Company by means of current or periodical reports.
